Dame Elizabeth Gloster encourages those affected by London Capital & Finance failure to provide info

Maria Nikolova

Individuals affected by the failure of LC&F will be able to send any relevant information via email.

A couple of months after it became clear that Dame Elizabeth Gloster will lead the independent investigation into the circumstances surrounding the failure of investment firm London Capital & Finance (LCF), she has made her first announcement of how she will conduct the investigation.

Dame Elizabeth aims to engage with bondholders, professional organisations and other interested parties in an organised and structured way so that she can address the issues which are relevant to her investigation.

Once she has her full independent support team in place, she and members of her team will be in touch with bondholders’ groups, bondholders and others to discuss the most useful ways in which her investigation can engage with them and take forward their offers of assistance and provision of information.

Individuals impacted by the failure of LC&F will also be able to send any relevant information via email. The email address is [email protected] and will only be accessed by Dame Elizabeth and her independent team.

Dame Elizabeth said:

‘Many people have been badly affected by the failure of London Capital & Finance. 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 at the email address above.’

On January 30, 2019, LC&F entered administration.

LC&F issued mini-bonds to 11,625 investors, with a value of £237,207,497. The FCA’s view is that issuing mini-bonds is not normally a regulated activity so that firms issuing mini-bonds do not usually need to be authorised by the FCA. However, when an authorised firm approves a promotion for mini-bonds, they must ensure that it is in line with FCA rules that the financial promotion is fair, clear and not misleading. This means, for example, that risks are required to be appropriately communicated.

On May 23, 2019, following a request from the FCA’s Board, the Economic Secretary to the Treasury directed the FCA to carry out an independent investigation into the circumstances surrounding the collapse of LC&F. At the same time, the Treasury announced its approval of the proposed appointment of Dame Elizabeth Gloster to lead the Investigation. While her appointment was being finalised, Dame Elizabeth signed an agreement, which enabled the FCA to share restricted information and thereby begin work/reading in. Her appointment was formally made on July 10, 2019.

The independent investigation will consider the FCA’s actions, policies and approach when regulating LC&F. Alongside this, the Treasury also announced it would review the wider policy questions raised by the case of LC&F. These relate to the regulatory and tax treatment of the kinds of retail investment products issued by London Capital and Finance.

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