The independent review into the failure of mini-bond provider London Capital and Finance and the FCA’s role in its collapse will not have the power to compel staff at the regulator to attend interviews.
The protocol for the investigation, to be led by former judge Dame Elizabeth Gloster has been published today, six months after LC&F fell into administration.
The protoocal reads: “The FCA will endeavour to secure the attendance at a meeting of any identified individuals who are current or former employees of the FCA. It should be noted, however, that attendance by an individual at a meeting
with you is not compulsory under statutory powers.”
LC&F defaulted in January, leaving some 11,500 investors with a total loss of over £237m. This came a month after the FCA issued it with an order to take down promotional material of the bonds, ruling they were “misleading, not fair, and unclear.”
In a statement today, Dame Elizabeth Gloster has said she aims to engage with bondholders, professional organisations and other interested parties for her investigation.
She says: “Many people have been badly affected by the failure of LC&F. There is rightly a great deal of interest in what happened at LC&F and the role of the FCA.
“I am keen to hear from as many of those affected as possible and am grateful for the information I have already received from bondholders and others. I would encourage anyone who wants to engage with the investigation to get in touch with me.”
The scope of the investigation will also include examination of the wider regulatory system, that led to a collapse of the firm.
While issuing “mini-bonds” is not regulated, their promotions are. LC&F was formerly authorised by the FCA prior to its collapse.
On March 19, 2019, Treasury Select Committee chair Nicky Morgan asked the FCA‘s board to consider whether the LC&F collapse warrants statutory investigation into possible regulatory failure.
On 28 March, 2019, acting on the board’s recommendation, the FCA chair Charles Randell wrote to the economic secretary to the Treasury and MP John Glen, asking for permission to commission the statutory investigation, saying it “would ensure that the review has a broad and comprehensive remit.”
Glen agreed. The FCA then appointed Dame Elizabeth Gloster to lead the investigation.