An independent investigation into events at London Capital & Finance (LC&F) and the circumstances surrounding them has been ordered by the City Minister today (1 April).
The news comes following a meeting of the Financial Conduct Authority (FCA) board where they agreed that there is a public interest in a statutory investigation, and the economic secretary to the Treasury, John Glen, has agreed to use powers under the Financial Services Act 2012 to require the FCA to undertake an investigation into the events at LC&F and the circumstances surrounding them.
The investigation will be led by an independent person appointed by the FCA, with the approval of the Treasury. In January LC&F went into administration owing £236m to around 11,000 investors. This followed concerns raised by the FCA back in December 2018, when the regulator demanded it withdrew its promotional material for its mini bonds due to the marketing was ‘misleading, not fair and unclear’.
Glen said: “The recent stories of those affected by the collapse of LC&F are incredibly concerning. I want to make sure we have the strongest and safest financial system possible. By ordering this investigation, we will better understand the circumstances around the collapse and make sure we are properly protecting those who invest their money in the future.”
Separately, the FCA announced it had already started an investigation into LC&F’s financial promotions. The Serious Fraud Office, working in conjunction with the FCA, has also opened an investigation into individuals associated with LC&F.
The detailed direction that will order the independent investigation and set out its terms will take into account any issues arising, including from current regulatory and enforcement investigations, and be determined in consultation with the independent person appointed to lead it.
The direction and the investigation’s report will be laid before Parliament.