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London Capital & Finance review will not have power to force FCA interviews

FCA building FCA feesThe 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.



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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Make the reviewer impotent and, hey presto, it turns out we are not ham-fisted incompetents after all.

  2. Julian Stevens 25th July 2019 at 7:13 pm

    What’s that stack of cans of whitewash I see in the corner?

  3. So is the FCA accountable or unaccountable?

    They (FCA) get to appoint the investigator themselves….they (FCA) and staff members will not have to answer any calls for scrutiny or evidence …..

    So any question given to the FCA and it’s past or present staff members that might lead to unwanted attention, will get the stock answer …. “I can neither confirm or deny” followed by a raspberry and two fingers.

  4. I’m a certified cynic but for once I think the FCA might be in a bit of bother over this. The headline is a bit of a red herring as compelling witnesses is not really a great way of gathering evidence anyway. Anyone who refuses is is going to be noted and the reviewer is free to draw their own conclusions.

    Dame Elizabeth Gloster is a former Court of Appeal judge with no affiliation to anyone and certainly won’t have anything to gain personally one way or the other. Truth and reputation will be her biggest concern, so she won’t give a fig about whether the final report upsets the FCA.

    She has stated that she wants to hear from all interested parties, that includes IFAs. Don’t say you weren’t given the opportunity…

  5. Won’t a review with no power to compel staff at the regulator to attend interviews be largely impotent?

  6. I invested £10,000 with LC&F last year. In communications with Craig Mason and Jacob I understood I was investing in a bond. When my Bond certificate came through I realised my funds were placed in mini bonds. After speaking to the Financial Ombudsman I wrote to LC&F with a formal complaint to Rob South explaining how I was misold a financial product. Should I have known I was investing in mini bonds I would never have gone ahead as I know how risky these can be. I gave them as advised 8 weeks to reply. They never gave me a final response. I told the FSCS I was lied to and mislead!!

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