London Capital and Finance

masonic

jimjames wrote: »

FSCS has issued a statement on LCF today stating it is not covered.

https://www.fscs.org.uk/news/2019/march/london-capital--finance-plc-has-failed/

But then says if anything changes they will consider claims

https://damn-lies-and-statistics.blogspot.com/2019/03/london-capital-finance-fscs-statement.html

It's a real shame neither the FCA or FSCS are willing to spell out categorically what would be required for coverage to apply (e.g. bondholders who received advice from a regulated adviser would be covered for claims against their adviser). Instead it seems the administrators are clocking up a substantial amount of chargeable hours dealing with bondholder queries and poring over emails and documents sent to them on something that could (and IMHO likely will) be a complete no-hoper.

There is precedent for those receiving what they thought was "advice" from an "adviser" with no authorisation to give advice having no recourse to the FSCS. There is also precedent for those investing in products they thought were regulated but in fact were unregulated having no recourse to the FSCS. There is also very clear precedent that if you buy investment bonds issued by a regulated firm, even if they are a mainstream regulated investment, FSCS protection does not cover you against the investment risk of having to take a massive haircut if the issuer gets into trouble - a good example of the latter would be Manchester Building Society PIBS, where the bonds are trading for 16% of their nominal value having lost 90% of their value since 2016.

jimjames

J** A*** at the Evening Standard (name blanked to avoid forum rules on individuals but see article) has another good piece about LCF

https://www.standard.co.uk/business/administrators-warn-on-london-capital-and-finance-cash-a4084701.html

Some good news on one loan, not so much on the rest.

Reaper

More than anything I think it was the claim all the loans were backed up by charges on assets greater than the loan value which encouraged people to invest. Did this claim not cross the line into outright fraud now we can see there was no such thing and LCF knew it?

jimjames

Reaper wrote: »

More than anything I think it was the claim all the loans were backed up by charges on assets greater than the loan value which encouraged people to invest. Did this claim not cross the line into outright fraud now we can see there was no such thing and LCF knew it?

I think there are a number of elements that could cross into fraud but when you look at the items used as assets for the loans then it's not exactly physical items like property but things like contracts for land, shares in unlisted companies, loans made to others etc which can all be assigned very different values depending on who is asking and a lot of other factors. Look at the list of assets here:

https://damn-lies-and-statistics.blogspot.com/2019/03/lcf-bonds-asset-backed-loans.html

One that could border on fraud is where 2 linked companies have both borrowed money and used one company as security for the other.

Another assessment of recovery from the ES article from Bondreview

https://bondreview.co.uk/2019/03/08/london-capital-finance-administrator-optimistic-about-recovering-not-a-lot/

masonic

Reaper wrote: »

More than anything I think it was the claim all the loans were backed up by charges on assets greater than the loan value which encouraged people to invest. Did this claim not cross the line into outright fraud now we can see there was no such thing and LCF knew it?

That will very much depend on whether the loans were backed up by valuation reports issued by appropriately qualified surveyors. It is likely that they will be. Valuations often do not reflect actual fire sale prices, and often are based on assumptions that are fair on the date they are made, but not several years later when for example planning permission may have lapsed or been rejected, or a development has not progressed as planned.

It is commonplace within the P2P sector that loans put into recovery have delivered far less than the valuation suggested, yet no P2P platform has been prosecuted for fraud, nor any valuer successfully sued, and there has been no call on any valuer's Professional Indemnity Insurance, even in cases where there was an 80-100% capital loss sustained by investors.

So I don't hold out much hope.

bail-in

https://www.telegraph.co.uk/investing/news/investors-handed-extra-protection-city-watchdogs-new-database/amp/

Good news for protection of investors. Note also that terms in a contract you deem to be unfair can be reported to the CMA, the Competition and Markets Authority, using their online form. It is not necessary for a complainant reporting to have entered into the contract. The CMA will investigate, although the FCA may be more appropriate in many cases. The CMA will not deal with personal complaints or correspond in relation to such, but they will investigate if contractual terms are unfair and have considerable powers to enforce changes and rectification if terms are considered unfair according to statutory definitions.

bail-in

https://bondreview.co.uk/2019/03/08/london-capital-finance-administrator-optimistic-about-recovering-not-a-lot/

Towards the end of the above article there is a paragraph speculating on LCF's possible prowess in other highly speculative investments, namely hedge funds. An interested party did wonder a few months back if any of the LCF bondholder capital found its way into the Surge Financial Ltd director Kerry's hedge fund.

AnotherJoe

BBC article.
https://www.bbc.co.uk/news/uk-england-47454328

masonic

AnotherJoe wrote: »

BBC article.
https://www.bbc.co.uk/news/uk-england-47454328

Better late than never I suppose, although Moneybox picked up the story a lot more quickly and will be giving more coverage to it today.

Hopefully some of this coverage will be seen by those targeted by Blackmore and other purveyors of wolves dressed in sheep's clothing.

unkle

It's hard to see people getting back more than 10-20p in the £1 at best.

Very sad,