View more on these topics

Nic Cicutti: Latest collapsed investment firm a misselling scandal of FCA’s making

Regulator was warned about London Capital & Finance but acted too late. Now it must clean up the mess

I have said this before and I will say it again: West Riding Personal Financial Solutions’ Neil Liversidge is an adviser I respect hugely. Salty and down to earth, a committed trade body activist and a staunch defender of his clients’ interests, he is a fine example of what an adviser should be. Last week, both the Guardian and Financial Times provided another reason why he is so good.

Almost single-handedly, Liversidge smelled something fishy about London Capital & Finance, the self-styled bond firm which has just collapsed with some £230m of investors’ money. The firm is now the subject of a police probe.

Liversidge wrote to the FCA in November 2015 about his suspicions and to warn the regulator that “I would not class this as a suitable investment for the unsophisticated retail market”.

It then took the regulator three whole years to act on his warning, only freezing LCF’s accounts late last year, by which time it was too late.

I will come back to the FCA’s role in a minute. First, it is worth noting just how far advisers have come in the past decade when it comes to representing their clients’ interests.

About five or six years ago, I accepted an invitation from an adviser working in a town near to where I live to go out for a drink.

If I’m honest, I put the poor man off for many months, and only accepted when he told me he had a story to tell me about Arch Cru and advisers in his town.

Many readers of Money Marketing will have bitter memories of Arch Cru. As do some 20,000 investors, who were mis-advised to place up to £400m into supposedly cautiously managed funds, but the money went instead into all sorts of weird and wonderful investments, including wine, Greek shipping and forestry projects.

Last month marked the 10th anniversary since the suspension of the funds and many investors will be forever out of pocket, with some calculations I have read indicating the final payout averages 60 per cent of total sums invested.

Of course, some who invested less and received compensation through the Financial Services Compensation Scheme will have done better.

For advisers themselves, the Arch Cru scandal was also a blow. Some fell for the “low-risk” patter of those marketing the funds or were reassured by the fact that supposedly reputable firms like Capita were on board.

Others are still angry about having to stump up compensation to investors through the FSCS when they always believed investing in Arch Cru was likely to end in tears.

For some advisers, Arch Cru also brought an end to decade-long relationships with colleagues in their areas, as dividing lines opened up between those who had advised clients to invest in those funds and those that did not.

This is what happened to the chap I met for a drink. He told me that, in his town, which at that time had eight to 10 small- or mid-sized firms operating in the area, about three were known to have recommended some clients to invest in Arch Cru. The rest, for various reasons, did not. He was among the latter.

He told me that, in the summer of 2008, he began to have serious doubts about Arch Cru and not only told his clients to avoid its funds, but also spoke out against it in some of the formal and informal gatherings of advisers in his area.

Which is where it gets messy. He claimed that, as a result of doing so, he was ostracised by his colleagues – including some, like him, who thought recommending Arch Cru funds to clients was madness but felt you needed to show respect to your peers because you did not know the specific reasoning behind their advice to investors.

My adviser, it has to be said, never took his concerns to the FSA at the time.

And it is hard to tell if he was giving me the full picture. Someone at another firm whom he named told me the tale was “crap” and my drinking pal was a bit of a Walter Mitty. I never ran with the story.

Even so, I somehow suspect that, if Arch Cru were to happen today, a lot more advisers would be dobbing the firm in to the regulator for its suspicious activities, as Liversidge did with LCF.

Which brings me back to the FCA. There is nothing about its inactivity in this specific case that is unusual.

Many of us know from bitter experience that the regulator is incapable of acting quickly enough to prevent obvious cases of misselling.

What is unusual about this case is that there is clear documentary evidence in the shape of Liversidge’s letter that it sat on its hands for years and did nothing as thousands of investors lost their money.

Which is why not one penny of any FSCS compensation paid to clients who lost money should be levied on financial advisers.

The levy should be paid for indefinitely out of the wages of all FCA employees, starting with its senior executives’ salaries and bonuses, who bear any responsibility for this debacle.

This is a scandal of the FCA’s making – and it should pay to sort out the mess.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

Recommended

2

FCA: Claims management regulation will boost industry-wide professionalism

The financial watchdog will begin regulating claims management companies from today in a bid to boost professionalism across the sector. Over 900 CMCs have registered for temporary permission while they go through the FCA authorisation process. CMCs will now need to meet and maintain a set of FCA standards. This follows a 2016 independent review […]

3

HMRC wins £40m legal case over tax avoidance scheme

HM Revenue and Customs will collect £40m in unpaid taxed following its successful case against tax avoidance scheme promoter, Hyrax Resourcing. In a statement today, HMRC confirms Hyrax will now be forced to divulge the names of 1,180 high earners who used it to dodge tax payments. Failure to provide the information could mean a […]

Scotland’s system of income tax rates and bands: how it works

From 6 April 2017, the Scottish Government were given powers to set a Scottish rate of income tax which applies to any non-savings, non-dividend income for those deemed to be Scottish taxpayers. These rates apply to an individual’s earned income, pension and most other taxable income. However, confusingly, for any savings income and dividend income, […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 43 comments at the moment, we would love to hear your opinion too.

  1. There are plenty of others sadly. No doubt into the future there will be more too. Yes, we didn’t become involved in Arch Cru because we were not allowed to look under the bonnet (even to lift the lid!) and clearly we know the reason why. I tried my hardest to have Stanley Gibbons’ stamp investment scheme banned but no one listened and look what happened there but thankfully still small scale but still wrong. Regulation could so easily be by default rather than in reverse – in other words ‘stop doing something till you prove it is acceptable’ rather than ‘we’ll close you down when you have fleeced hundreds of millions from poor, vulnerable and innocent people’.

  2. However given that the regulator like all government authorised bodies is never held to account for the messes it makes, it will fall on the FSCS and advisers to cough up, either that of the tax payers.

    The chances of anyone at the FCA being held to account are nigh on zero as they have demonstrated time and time again and is a large part of the reason why the relationship between advisers and the FCA is so poor.

    Advisers are held to one standard, whilst the FCA are held to none.

  3. For once, I doubt you will get any disagreement from IFAs about who should be paying for the mess the FCA have made Nic. But we know that isn’t going to happen, unfortunately, and all the media can do is let the public know how useless the FCA are and how good advisers end up paying for the FCA’s laissez-faire attitude.
    I agree with you about Neil Liversidge as well. Apart form the fact that our views about brexit differ, I very much respect his insight and opinions on this industry.

    • Christopher Petrie 16th April 2019 at 1:34 pm

      Must you shoehorn Brexit into this? We’re all heartily fed up with that subject!

      • How touchy are you? I was making the point of how much I admired Neil Liversidge (but he might remember I disagreed with him on Brexit) and you want to turn it into an argument. I’m sure, if Neil didn’t like my compliment, he would tell me himself. But I suspect Neil is too sensible for that.

        I would suggest, if you are so fed up with Brexit, you should either ignore it when it’s mentioned or vote remain at the next referendum and then you won’t have to hear about it any more.

  4. “The levy should be paid for indefinitely out of the wages of all FCA employees, starting with its senior executives’ salaries and bonuses, who bear any responsibility for this debacle.”

    What, including the receptionists and the cleaners? Forget it. Employees aren’t liable for the failings of senior management. 99% of FCA employees won’t have ever seen Liversidge’s letter or the stream of others sent to the FCA about LCF.

    So in reality we are talking, at most, about clawing back pay from senior management.

    There are nine people on the FCA board and the highest paid of those was paid ~£600k last year. Can’t be bothered to work out how much the total is, but if we clawed back the entire pay of the FCA board for three years it’s not going to be much more than £10 million at most.

    Where’s the other £220m going to come from? Taking another £10 million from the pay grade below? Then what?

    And in reality clawback is not going to happen. If we tried that, £10m would be immmediately swallowed up in legal costs.

    Nice sentiment Nic but you’re a columnist writing for an IFA trade paper, we expect a little more than sentiment.

    No, one way or another the general public will pay. Instead of vainly trying to resist that, use the bill to drive change.

  5. Yet another in a long line of failures to act on information received ~ which seems somewhat at odds with the FCA’s claim to want to encourage whistle blowing.

    Is there any likelihood at all that the investigation into its failings, to be commissioned by the FCA itself, will result in anyone being held to account? Most probably, the individuals responsible will be shielded by the claim that it was a collective failure. Isn’t that always the way?

  6. Spot on Nic
    The F Forget C Chasing A Anyone are a joke and if it was their money being paid out they might take their positions more seriously

  7. Not sure that penalising the typists is justified.

  8. Add PPI to the list of regulator shame. I had a very open discussion with a senior manager in late 2004 where I expressed concern about the large scale mis-selling of PPI, in particular single premium products added to mortgages. I was told that the FCA were fully aware and investigations were on-going. They hoped that some upcoming fines were going to act as a deterrent and firms would clean up their acts as a result. Right.

    The rest, as they say, is history. Single premium PPI was banned in 2009…

    It’s hardly rocket science to identify what’s going on now that will be a problem further down the line. The FCA only need to read the MM comments section for all the intelligence they need.

    As I’ve said before, it appears safer and politically expedient for the FCA to wait until a problem openly manifests itself and mop up later, than to take affirmative action earlier. Why else would they wait so long? DB transfers is a case in point…

    • The FCA’s abiding passion is to make rocket science out of everything. Simple, practical, easy and quickly implementable solutions just aren’t part of its mindset.

  9. This isn’t the fault of the FCA or indeed the FSA before them..it is the result of years of in house breeding, arrogance, ingrained hatred, and prejudice

    Doing what you have always done expecting different results will only yield a nil position and more of the same.

    Time and time again the regulator has had ample opportunity to really make a difference think outside the box, be proactive, forward think and “ENGAGE” not just with the financial industry but with the consumer as well.

    Alas they just stand blind, deaf and dumb oblivious to the world around them playing the blame game, and collectively punishing.

    This is also true of the FSCS, I know we can all agree the FSCS is great and very necessary, but in its current guise grossly unfair, archaic, and not fit for purpose.

  10. John Hutton-Attenborough 16th April 2019 at 1:46 pm

    Nic,
    A headline in your paper on 4 April!

    FCA: Advisers should be reporting bad practice

    It made me shake my head in amazement!

  11. Trevor Harrington 16th April 2019 at 2:12 pm

    Nic,

    As we all pay for both the FSCS and the FCA, and as those costs are obviously passed onto the clients, I cannot see that one is a better source of financial penalty, payment, or retribution than another.

    Having said that, at least the FSCS levy is reasonably clear what it is intended for and very visible when it increases – thus giving a better indication of when such annual costs are increasing (always?).

    The real issue is that the FCA is not accountable anymore to any government body (thank you Gordon Brown – again!), and therefore it can stick two fingers up to whoever it so pleases, and of course it therefore does so regularly and spectacularly (example – Hector Sants and the Treasury select committee ?).

    If the FCA is failing to do its job quickly and properly (can there be any doubt any longer), then we need primary legislation to bring them back into the oversight of a government body such as the Treasury.

    Until we do so, the FCA will continue to … disappoint.

  12. Am I alone in thinking that the FCA should apply the SMCR to itself?

  13. I make sure I get the name of the person I deal with at the FCA and make sure they are aware that until a name higher up in the foodchain appears, it will be their name mentioned when or if the proverbial hits the fan.
    I did it before when commenting on an FCA article and mentioend the names of the two FSA (as was then) staff i ahd dealt with in the comments section. teh FCA phoned the editor and asked them to remove my comments. Editor said is it true…. they then said they’d only remove it if I agreed. Editor phoned me…. I said NO it is factually correct and true, if they FSA don’t like it., then do the job properly or be held to account in the press even if no-one else will/can.
    Perhaps Neil would be kind enough to name the highest person in the foodchain his report on LC&F got to an then Nic’s targeting of bonuses can be better directed i.e. to the highest named person and one above for not supervising them properly.
    Until FCA staff have some skin in the game, as DH says, they will in-breed, be arrogant and hate those they regulate.

    • “Perhaps Neil would be kind enough to name the highest person in the foodchain his report on LC&F got to an then Nic’s targeting of bonuses can be better directed i.e. to the highest named person and one above for not supervising them properly.”

      Oh good. Now instead of clawing back £10m-odd from the FCA board, which was Nic’s idea, we’re clawing back £150,000 (at best) from the schmuck who filed Neil’s letter in the cylindrical filing tray under his desk. Or whoever was on the wrong end of the Rhodesia Solution.

      Leaving the remaining £229,850,000 LCF compensation bill to be paid by advisers and other intermediaries, and ultimately the general public.

      (For those who haven’t watched Yes Minister, the Rhodesia Solution involves sending an email to your FCA line manager while they are on holiday, saying something like “An IFA has raised concerns regarding the possibility of certain irregularities involving a non-authorised business. While there could be a case for further investigation, I should stress that available information is limited and relevant facts could be difficult to establish with any degree of certainty.” This passes up the responsibility without running the risk of annoying your boss by dumping work on their desk. It is equivalent to throwing the letter in the bin, only you can’t be blamed for it.)

  14. I can’t seem to find it online to check (so forgive me if I’m wrong), but I seem to recall that the product, being from a non-FCA authorised (i.e. unregulated) provider, was beyond the clutches of the FCA and that they could only intervene once they got wind of it having been promoted and marketed by a firm that was or if they became aware of LC&F engaging in activities for which they should have had authorisation, but didn’t (which appears to have been the case).

    So whilst the FCA didn’t leap into action as quickly as it ought to have done, it perhaps wasn’t quite as tardy as may at first appear to be the case.

    • Misleading financial promotions and promoting unregulated investments to non-HNW/sophisticated investors are within the FCA’s remit whether the firms involved are regulated or not.

      • Fair enough, though it wouldn’t have been within the FCA’s remit to check the quality and honesty of LC&F’s marketing material before it was published, only after it became apparent that, in various ways, it was defective. Then again, Neil L did report as much as long ago as November 2015 and the FCA appears to have done nothing until the sherbert started flying off the fan blades.

        One really has to wonder how many of these motorway pile-ups the powers that be are going to go on allowing the FCA to get away with before actually DOING something to bring those responsible to book. The regulator’s history in this regard goes back as far as Equitable Life yet STILL it fails regularly to act on information submitted to it. It’s a national disgrace.

  15. “Which is why not one penny of any FSCS compensation paid to clients who lost money should be levied on financial advisers.” Really? What of those advisers who had their concerns but chose to press on with Selling LC&F products, doubtless because of the benefits to themselves of doing so?

    “The levy should be paid for indefinitely out of the wages of all FCA employees, starting with its senior executives’ salaries and bonuses, who bear any responsibility for this debacle.”

    But you very clearly set out that advisers have axes to grind and fall out with each other, let alone product providers. So how can the FCA, or anyone else, take the word of just one adviser at face value? As you put it, Mr Liversidge made this complaint ‘Almost single-handedly’. If the FCA responded to every (almost) single-handed complaint from an Adviser by launching an investigation, there wouldn’t be any products left to sell and Advisers’ regulatory levies would have to rocket to cover those investigation costs.

    • Says the former FSA employee. Why should we trust your word as a lawyer and former staff member over that of the one whistleblower, Mr Liversidge. Maybe because he’s not an insider. Last week Debbie Gupta was telling us more of us need to whistleblow, http://www.moneymarketing.co.uk/fca-mistrust-cant-frame-our-relationship-with-advisers/ but you tell us why should the FSA even take note of warnings from individuals?

      • Your predecessors were told about PPI back in the 1980’s and that SIPP (lack of) regulation was an accident waiting to happen and like the wild West, but we’re all still paying for it (consumers and advisers) but those in power just move on to their next gravy train of a senior job even when they’ve been warned of what is going wrong.

        • So Phil, You shouldn’t trust my word any more than you should anyone else’s. But I do ask that you address my arguments rather than look at my career. They are:

          1. Advisers come in all shapes and sizes and they are not neutral observers. Regulators have to deal with many advisers wanting to complain and by no means all of them come in good faith. For that reason it is the volume of complaints which usually indicates where something is wrong and within that volume of complaints, the balance between interests (advisers, providers and consumers) also needs to be taken into account. I’ll address more of this when I reply to Mr Liversidge. With SIPPS, with PPI both advisers and providers benefited from the sales. Shouldn’t it be the people who benefited who make the compensation?

          2. For every complaint about regulators moving too slowly, there is one about their being too heavy handed. In my time as a regulator I fined some life offices making some appalling sales, I took many advisers conducting semi-criminal (OK criminal) behaviour to discipline and I conducted a number of investigations, all of which (all!) found serious issues. My proudest moment was closing down a penny share dealership (what a nasty bunch of sharks they were). I also drafted policy to ensure that regulators didn’t leave pools of risky firms for compensation schemes to mop up. Am I proud of my time as a regulator? Absolutely. We live in a market with considerably more consumer confidence as a result.

          • Do you have any evidence that Neil was the only person who reported his concerns about LC&F to the FCA? I’d be very surprised if there were no others. Neil himself wouldn’t know and the FCA certainly wouldn’t publish such information. So what is the basis of your supposition?

    • Neil Liversidge 17th April 2019 at 8:25 am

      @Steven Rhodes: I don’t sling mud, I make specific points and I provide evidence. I wrote to the FCA specifically making the point that LCF’s promotions were reaching unsophisticated investors who were not high net worth. I also made the point that the unprofessional nature of the promotion gave concerns as to the overall soundness of the enterprise. I backed this up with all relevant material. Why should they listen to me? Okay, let’s try this:
      1. I have no axe to grind and there’s no monetary benefit to me spending my time on stuff like this; I just don’t like scammers. I saw it happen to my parents when I was a kid and other family members have been scam victims more recently.
      2. I’m the guy who dobbed in Alchemy to the DTI circa 1995. That was a scam based in Barnsley which targeted ordinary working folk. Google it. Prosecutions eventually followed.
      3. I’m the guy who dobbed in Sylvan & Queens to the FSA in 1999/2000 and have a letter of thanks from them on file to prove it. If you want to see a copy, email me.
      4. I’m the guy who dobbed in a Halifax IFA who was trying to set up his own mini-Madoff scheme in 2009 and over a year later when the FSA had done nowt I gave the lot to the media. A reputable journal checked it out and it made a full front page. Email me if you want a copy. After that, the FSA acted and closed him down.
      5. Before LCF crashed I provided information and advice on another scam which is still in the regulatory works pending action, for which reason I can’t name.

      Many LCF investors have contacted me. Not one – NOT ONE – invested on the advice of an IFA firm, so why should the FSCS pay? This débâcle had zero to do with regulated advice. Other advisors I know warned their clients off LCF and some, I believe, going by the chat on an advisors’ Facebook page, may also have warned the FCA. LCF looks to me like a direct-to-consumer Ponzi. I’ve not heard yet of a single IFA firm that’s in the frame for putting clients into it. If any have then that’s down to them and their PII and failing that the FSCS, where a claim would be fair enough, but failing an advisor’s involvement the FSCS owes nothing. What I will also say is this: I wrote an article in Money marketing in August 2017. Here’s the link: https://www.moneymarketing.co.uk/neil-liversidge-peer-peer-isas-will-ruin-savings-accounts-good-name/ Subsequently I got a lot of flak on a forum for P2P investors who all reckoned they knew better and who derided IFAs in general. Among the LCF ‘victims’ who’ve contacted me was one who’d invested £200k but boasted that it was a ‘small amount’ to him. He then went on to ask me for “a list of the mini-bonds you approve”. Needless to say, I declined to supply him anything of the sort. Whereas there are undoubtedly some less-wealthy and tragic victims of LCF, many if not most seem to have been fairly well-heeled and greedy for a better return than that which the ‘respectable’ market was offering. Having not taken advice from the advisors they look down on, they now want those same advisors to fund their compensation through the FSCS. I think my Jewish friends call that ‘chutzpah’.

      • Neil Liversidge 17th April 2019 at 8:33 am

        Oh yes, and one more I almost forgot Steven: I’m the guy who convinced a push-payment fraudster to come to our office where she was arrested by two cops from West Yorkshire CID. That was in the press too. The article links are on our website.

        • Mr Liversidge,

          You write “I don’t sling mud” Quite right, and nor did I accuse you of doing so. “I make specific points and I provide evidence.” And I’ve no doubt you did in this case, too. I made no criticism of your conduct. In fact it was exemplary and what is needed (with other factors) for a regulatory system to work.

          But, as I replied to Mr Castle, yours was only one voice. Closing down a firm for business is a serious undertaking. For every crook at the top there are jobs lost by the poor bloody infantry who have no clue of what is going on. And this is, after all, a firm which has already been authorised. You can just hear the QC at judicial review asking why the evidence of one (albeit senior and respected) adviser was taken over auditors and the procedure setting up LCF in the first place. This is why I believe Nic’s article was over the top (and why I quoted him in some length and addressed my points to him). Whatever evidence comes in has to be investigated in detail because, if not, it will be pulled apart in the High Court, and that investigation takes time.

          There are comments here that complaints were made and nothing was done. I can tell you something was always done. But, as I say, if every complaint resulted in an investigation there would be little business to write. No Adviser would want to work in an industry where the FCA had a 100% record of rooting out bad behaviour: you wouldn’t move for rules and levies.

          You state “Many LCF investors have contacted me. Not one – NOT ONE – invested on the advice of an IFA firm, so why should the FSCS pay?” I have sympathy with advisers not having to pay: there has always been a degree of unfairness to the Compensation Schemes for those who keep their noses clean. But suggesting that the FCA employees pay is like suggesting the Police pay for crime: we’d have no police.

          I ask every Adviser with an account here if they would be happy for their firm to receive a full investigation team visit on the basis of just one complaint from another Adviser. What about just two advisers? How many?

          So, Neil, genuinely keep up the good work; but be aware that there is a mass of further activity that results from just one complaint. The motto at Lautro when I joined was ‘never do nothing’ and we followed that philosophy through at the FSA.

          I repeat, I have no criticism of you, but I think this article is over the top. I’ve seen this story from the other side: and it requires some balance.

          Nic, of course, will be delighted! All this flak from one article? Gold dust 🙂

          • Steven – You expect us to see it from your side and then you say to us ” Closing down a firm for business is a serious undertaking” which is actually not true as the FCA have probably just done that to some firms with the FOS increase being only with 3 weeks notice so that if they were doing DB transfers, they may not be able to renew their PI.
            We don’t do DB transfers, but the three weeks notice nearly didn’t give us enough time to sort out our PI and resulted in this snotty email from the FCA which effectively threatened to put us out of business despite NO complaints or whistleblowing so the FCA doesn’t give a flying French Connection (as evidenced by the minutes of their meeting in February immediately before their decision) about firms with no complaints, but according to has to tread carefully around those where whistleblowers have identified serious issues.
            I obtained compliant with the new FOS limit PI, but NO thanks to the FCA who didn’t help at all and don’t give a flying F about the firms and their staff they regulate.
            Dear Mr Castle,
            Firm: Financial Escape Limited – FRN 425430
            Subject: Failure to Renew Professional Indemnity Insurance (PII)
            Case Reference: 205835664
            Your firm is required to have appropriate PII in place so it can demonstrate to the FCA it has appropriate resources, which is a minimum requirement for your firm to remain authorised.
            This email specifies the action you must take. You need to send us a response by the 26 April 2019. Please do not delete any part of the subject line when replying to this email.
            What action you must take
            1. If you currently have PII you must:
            1. Send us a copy of your PII policy.
            2. If you misreported on your RMAR, please tell us. Please also log into your GABRIEL account here and request to resubmit data item RMA-E.
            2. If you do not currently hold PII you must:
            1. Cease giving advice immediately if you have not already done so.
            2. Complete a Voluntary Application for an Imposition of Requirement (VREQ) application. This will add a requirement to your firm’s permission requiring it to cease conducting all regulated activities. Please note, if you subsequently obtain PII cover, you must submit a Variation of Permission (VoP) application via Connect to remove this requirement prior to resuming regulated activities.
            3. Apply to cancel your firm’s Part 4A permission if you are unable to obtain PII cover, or have no reasonable likelihood of doing so. We expect you to apply to cancel within 4 weeks of the date of this email if you cannot obtain PII cover. Your cancellation form should be submitted via Connect.
            4. Tell us why you have been unable to renew your PII cover.
            3. If you do not intend to renew your PII you must:
            1. Cease giving advice immediately if you have not already done so.
            2. Apply to cancel your Part 4A permission within 10 working days of the receipt of this email. Your cancellation form should be submitted via Connect.
            Why you must take this action
            Maintaining adequate PII cover is important because:
            1. It provides additional financial resources from which firms can pay justified claims.
            2. It helps to prevent insolvency and excessive claims on the Financial Services Compensation Scheme (FSCS), which is funded by firms that are still trading.
            3. For insurance intermediaries, it is required by the Insurance Mediation Directive (IMD).
            Please also note, under Principle 11 of the FCA’s Principles for Businesses, a firm must deal with its regulators in an open and cooperative way. If you do not take action to resolve this issue in a timely manner and to our satisfaction, we may ask you to apply to cancel your firm’s Part 4A permission. If we do ask you to apply to cancel your permission and you fail to do so, you may be referred to our Enforcement and Market Oversight Division for action to stop your firm from conducting regulated business and to cancel your firm’s permission.
            Further Help and Guidance
            4. FCA Handbook:
            1. The PII requirements for mortgage and general insurance intermediaries are set out in Chapter 3.2 of the Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries (MIPRU).
            2. The PII requirements for personal investment firms are set out in Chapter 13 of the Interim Prudential Sourcebook for Investment Businesses (IPRU-INV).
            5. General Guidance:
            1. Further information about PII can be found on our website here.
            6. RMAR Help Texts & FAQs
            1. Retail Mediation Activities (RMA) guidance can be found here.
            2. Retail Mediation Activity data item help texts can be found on our website here.
            3. Retail Mediation Activity data item frequently asked questions can be found on our website here.
            Please ensure you respond as requested above by the 26 April 2019.
            Yours sincerely

            B O (Mr)
            Associate / Event Supervision / Authorisation

          • No one is suggesting the FCA close firms down on a whim. But some issues are more obvious than others and deserve proportionate attention, and quick.

            LCF wasn’t authorised (as you suggest). It’s promotions and investments were aimed squarely at the general public without any real controls. How much more of a red flag do you need? On balance, whose interests were paramount, the general public or LCF? Do something, even if it’s just a public statement of concern – that might have saved a few people’s savings. Doing nothing achieves nothing.

            No one is suggesting the regulator’s job is easy, quite the contrary. However, by repeatedly appearing to abstain from any substantive action before it’s too late is failing the very consumers it is there to protect.

          • Neil Liversidge 18th April 2019 at 6:15 pm

            I didn’t ask the FCA to close them down. I drew attention to the nature of their promotion and I enclosed a copy of the advice I gave to the client who asked my advice on it. That advice is pasted in below:

            According to the last full set of accounts it only has 1 customer to whom it is lending everything – see attached. You’d be lending money via LC&F to
            International Resorts Group plc. Here’s their Companies House history – https://beta.companieshouse.gov.uk/company/08820833/filing-history Not very
            impressive!
            They’ve also been lenders to Sanctuary International PCC – who are worth the square root of bugger all
            https://companycheck.co.uk/company/07263415/ECORESORTS-SALES-LIMITED/group-structure
            You’re getting 8% according to their website, not 8.5%. LCF lends the money out at 15%. What do you know about the business they’re lending to?
            What do you know about the ‘assets’ it’s supposedly secured on? If a business has to pay 15% – so much over the odds for capital, there’s a reason
            why. Why won’t their bank accept their assets as collateral when you’re being asked to? This looks like some dodgy foreign property development
            outfit. No wonder banks won’t lend on it. Currently I’m helping out a Judge who was burned by a foreign property investment for a small fortune.
            All the references to the Bank of England are window dressing and there are misspellings on the website. All this about lending to small businesses is so much guff.
            The owners don’t have much at risk per the accounts and Michael Andrew Thomson has been a director of LC&F and IRG plc. Conflict of interest?
            It’s not an investment we’d recommend to clients. Not in a million years.

      • Have I missed something? What if any was the response you got from the FCA ?

        • Neil Liversidge 17th April 2019 at 1:36 pm

          At the time, zero, same as when I went to them re’ ‘the Hx Madoff’ and the same as on BlueInfinitas, plus a limp and minimal response on another case I can’t go into here for legal reasons. Non-response seemed to be the default.

      • Well said Neil, shall we wait for Stuart Rhodes apology to you?
        I don’t think I will hold my breath.

  16. Compensation for such schemes must be met by the providers.
    They to pay into a “kitty” that would be called on in such an eventuality. They have the power to police other providers. It would also mean that for a provider to trade then they would have to pay into a scheme in the first place

  17. I too have reported concerns to the FCA and it has done precisely nothing about it.

  18. @ Steven Rhodes and Neil Livesidge – I have just read an article on FTadvsier on this subject and it appears the FSCS are going to use oru money to pay for teh FCA’s failure to act on Neil (and others) warninsg soon enough.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com