UK Economic Secretary provides little consolation to clients of London Capital & Finance
LCF’s investors are unlikely to have access to the Financial Services Compensation Scheme, John Glen says.
Concerns continue to build up following the collapse of London Capital & Finance. Earlier this week, John Glen, Economic Secretary to the Treasury, has offered little consolation to those affected by the demise of the firm with regard to any compensation in store for them.
John Glen has responded to a question by Mrs Madeleine Moon. She wanted to ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of establishing a compensation fund for investors who lost funds as a result of the collapse of London Capital and Finance; and if he will make a statement.
In response, John Glen said:
“The administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure.
LCF’s investors are unlikely to have access to the Financial Services Compensation Scheme (FSCS). However, this would be for the FSCS to determine as an independent body from both HM Treasury and the Financial Conduct Authority.
The FSCS is working closely with the administrators to understand more about LCF’s activities. If there are circumstances that give rise to potentially valid claims, the FSCS will begin to accept claims against LCF and communicate this on their website”.
Let’s note that the FSCS has recently updated its statement about LCF. The updated message says:
“FSCS understands that the firm issued its own mini-bonds to investors on a non-advised basis and that these mini-bonds were not transferable securities. This activity is not a regulated activity under the Regulated Activities Order and, therefore, is not FSCS-protected. For this reason, while the firm is insolvent, we’re not accepting claims against the firm.
Should we determine that there are circumstances that give rise to potentially valid claims, we’ll begin to accept claims against London Capital & Finance plc. If this happens, we’ll communicate this to customers on our website. We’re working closely with the Administrators to understand more about how the firm carried out its regulated activities”.
In the meantime, there is still no clarity on the progress (if any) around the Serious Fraud Office (SFO) probe into several individuals associated with failed London Capital & Finance plc. The probe, as FinanceFeeds has reported, was launched on March 18, 2019.
Back in March, HM Solicitor General Robert Buckland MP responded to a question about the timetable for the SFO’s investigation into London Capital & Finance. His words did little to provide any clarity on how the investigation proceeds.
Mr Buckland said:
“It is not appropriate for me to provide a running commentary on a live criminal investigation or estimate when it will be completed. Whilst the SFO does make every effort to ensure that it progresses its investigations as quickly and efficiently as possible, its cases are by their nature complex, lengthy and resource intensive”.
The SFO has announced that, on March 4, 2019, four individuals were arrested in the Kent and Sussex areas. All four individuals have been released pending further investigation. The operation was coordinated with the assistance of the National Crime Agency, City of London Police, Kent Police, Sussex Police and the South East Regional Organised Crime Unit (SEROCU). This investigation was opened following a referral from the Financial Conduct Authority (FCA) to the National Economic Crime Centre (NECC).