PSFP European Regulation: What platforms need to know
The PSFP regulation: a harmonized framework for European crowdfunding
Adopted in October 2020 and fully applicable since November 2023, the European regulation on crowdfunding service providers (PSFP) — EU regulation 2020/1503 — constitutes the regulatory basis for crowdfunding in Europe. For the first time, a single text regulates the activity of crowdfunding platforms in all Member States.
This regulation has a twofold objective: protect investors and promote cross-border development crowdfunding. Among its most structuring provisions is the obligation for each platform to provide a continuity mechanism in the event of cessation of activity.
The continuity obligation: the key article of the regulation
Article 7 of the PSFP regulation requires platforms to have effective measures guaranteeing the continuity of service provision in the event of a failure. In concrete terms, each approved platform must:
- Formalize a business continuity plan including a cessation scenario
- Identify a third party service provider capable of taking over the management of current contracts
- Plan the methods of transferring data and financial flows
- Regularly test the viability of the continuity plan
These requirements are not simple recommendations: they condition the obtaining and maintenance of PSFP approval issued by the competent national authority.
The extinctive management plan: an obligation, not an option
The extinctive management plan is the operational part of the continuity plan. It precisely describes how refunds will be managed after the platform is discontinued. This plan should cover:
Technical aspects
The transfer of databases (contracts, schedules, KYC information), the establishment of borrower and lender areas, the automation of payment flows. La data migration is a critical point that needs to be tested regularly.
The legal aspects
The transfer of contractual obligations, compliance with the GDPR, the maintenance of identity verification processes (KYC/KYB). Each borrower and lender should be notified of the change in manager.
Financial aspects
The management of payment accounts, the collection of installments, the distribution of repayments to lenders. The service provider must have the necessary approvals to handle funds.
What is changing for French platforms
In France, platforms previously approved as CIP (participatory investment advisers) or IFP (crowdfunding intermediaries) had to migrate to PSFP status. This transition has involved new obligations, especially in terms of fire management.
The AMF, as the competent authority for the approval of PSFPs in France, verifies the solidity of the continuity plan during the examination of the file. An inadequate plan may result in a Refusal of approval or corrective measures.
How Runoff helps platforms comply
The Runoff solution was specifically designed to meet the requirements of the PSFP regulation in terms of fire extinguishing management. By relying on Runoff, platforms have a credible and tested plan that they can present to regulators.
Les biannual migration tests carried out by Runoff make it possible to demonstrate concretely that the data transfer is operational. Les annual audits loan agreements verify the integrity of the portfolio. These two pillars are tangible proof that the extinctive management plan is not just a theoretical document.
The PSFP regulation has transformed fire management from a good practice into an essential regulatory obligation. Platforms that anticipate it are getting a head start.
