Zooming in on the “individual portfolio management of loans” in the ambit of the Regulation on European crowdfunding service providers

During recent years, crowdfunding platforms have settled into the marketplace, becoming a real alternative mean to raise funds. In approaching the recent Regulation (EU) no. 2020/1503 on “European Crowdfunding Service Providers” (ECSPR), the article aims to examine the individual portfolio management of loans due to its peculiar characteristics which single this service out from those generally offered by lending-based crowdfunding platforms. The individual portfolio management of loans entails the allocation of a predetermined amount of funds of an investor to one or multiple crowdfunding projects, in accordance with a specific mandate. Unlike what generally happens with the credit provided through the traditional banking intermediation, therefore, the client is not directly selecting the project they want to invest in. Rather, the client indicates the parameters against which the crowdfunding service provider will sort out how to allocate the funds. The mandate thus becomes an extremely relevant factor as it allows, ex ante, the choice of investment and, ex post, the evaluation of the results produced by the management activity, provided that the crowdfunding service provider does not take any risk of its own, and, thus, the risk remains entirely on the investor. Such interesting relationship between the crowdfunding service provider offering individual portfolio management of loans and the investor eventually calls for an enhanced level of investor protection which translates into a wide set of transparency obligations and disclosure requirements.