FCA slaps fine and ban on ex-LCF director for minibonds ads
The UK’s Financial Conduct Authority (FCA) has cracked down on Floris Jakobus Huisamen, an ex-director in charge of compliance at London Capital & Finance plc (LCF).
The City watchdog hit Huisamen with a £31,800 fine and banned him from the financial services industry. The move comes after the former executive approved misleading ads about minibonds, leading to investor confusion.
Under Huisamen’s watch, LCF pushed minibonds to everyday investors with ads that made them seem way better than they actually were. These ads skipped over crucial details like hidden fees and LCF’s dodgy lending activities, leaving investors in the dark about the real risks.
Even though he had doubts about LCF’s big-picture strategy, Huisamen let these ads run without proper checks or pushing back against top brass. He didn’t seek solid proof for the claims in the ads or halt promotions that wrongly suggested FCA approval or made false claims, duping thousands of investors.
“Mr Huisamen should have ensured LCF’s financial promotions were ‘fair, clear, and not misleading’. However, under him, the approval process became an ineffective tick-box exercise – as a result, thousands of investors were persuaded to invest on the basis of highly misleading statements. His failings contributed to thousands of retail investors losing significant amounts of money. It is right that he can no longer work in financial services, said Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA.
Around 12,500 investors suffered major losses following the £236 million collapse of the mini-bond issuer five years ago. London Capital & Finance plc (LCF) went into administration on 30 January 2019 and FSCS declared it had failed a year later. The Financial Services Compensation Scheme (FSCS) had been administering the scheme on behalf of the government since November 2021.
Since the scheme began, FSCS said it paid over £115 million in compensation to 12,330 investors, or 99.5% of customers eligible for compensation. Of this figure, FSCS has contacted more than 700 bondholders with details of their compensation. The last instalment was paid under a government’s redress scheme to reimburse eligible LCF victims.
To kickstart with the process, the FSCS reviewed almost a million pieces of evidence in order to determine which customers had been given misleading advice by LCF. It has also gained access to an additional 100,000 emails held within LCF’s email server, which extended the time frame to complete the process beyond the original deadlines.