On 1 April 2019, the FCA announced that there will be an independent investigation into the failure of London Capital & Finance (LC&F).
The FCA stated that the investigation should cover:
- whether the existing regulatory system adequately protects retail purchasers of mini-bonds from unacceptable levels of harm; and
- the FCA’s supervision of LC&F.
LC&F was the issuer of mini-bonds which it stated it used to make loans to corporate borrowers to provide capital for further investment.
On 10 December 2018, the FCA directed LC&F to withdraw its promotional material immediately, on the basis that the material was misleading, not fair and unclear. On 13 December 2018, the FCA imposed additional requirements on LC&F including: a) not to dispose of or deal with its assets save in limited circumstances; b) to cease conducting all regulated activity; and c) not to communicate any financial promotions. Those requirements were imposed pursuant to a voluntary application by LC&F.
On 30 January 2019, LC&F entered administration and on 18 March 2019, the Serious Fraud Office announced that they had commenced an investigation into various individuals associated with LC&F.
The FCA believes that approximately 14,000 customers invested in LC&F’s bonds.
Information about the detailed terms of reference of the investigation and the identity of the independent reviewer will be published when it’s available.