London Capital and Finance

bail-in

masonic wrote: »

LCF were FCA authorised by virtue of their regulated lending business. That gives them the necessary authorisation to approve financial promotions - this does not require a specific permission.

Initially, at the time of the launch, LCF stated on the website it was a commercial lender. As I understand commercial lending, as opposed to personal lending, is unregulated. There was at that time, once the promotion and website was approved by an FCA authorised company, no need to be authorised by the FCA. For the first year of the bond launch they were not. Later LCF applied for authorisation and had various permissions granted but still the mini-bond product was unregulated and the commercial lending was unregulated. There was no real need, besides status in the public and investor eye for LCF, to become FCA authorised. Well they seemed fine the first year carrying out activities without being FCA authorised, although they did apply and authorisation was later granted. It was brought up with the FCA that LCF had no intention of selling regulated investment products nor carrying out regulated business activities. Perhaps they needed some permissions later that they did not need in the first year. Tbe FCA confirmed they did need some permissions. I find it comes back to image and status that FCA approval confers. FCA considered LCFas a commercial broker, but their membership of the commercial broker association was earlier cancelled by the commercial broker association before bond launch as LCF was a direct lender not a broker.

LHW99

There still doesn't seem to be any real action taken on advertisement that could attract the unwary, as shown in this article:
https://www.thisismoney.co.uk/money/saving/article-6772661/What-Dozens-advertising-5-savings-rate.html
Perhaps its only the Advertising Standards Authority that has jurisdiction?

dunstonh

jimjames wrote: »

Interesting that Moneybox say there is an investor who has a letter from FSCS from a couple of years ago that says they would be covered. I wonder if there is more to it or they were advised to invest hence the cover

The FSCS has a track record of not really being sure what they cover. For years it was thought SCARPs would be covered. They were not. Pension providers couldn't make their mind up whether insurance or investment FSCS protection applies. The FSCS was vague and didnt confirm. Even today, you get providers with differences of opinion.


Responses from the FSCS tend to be generic. So, maybe this person asked if the "fixed rate bond" gets protection and FSCS answered thinking it was a fixed term deposit.

masonic

bail-in wrote: »

Initially, at the time of the launch, LCF stated on the website it was a commercial lender. As I understand commercial lending, as opposed to personal lending, is unregulated. There was at that time, once the promotion and website was approved by an FCA authorised company, no need to be authorised by the FCA. For the first year of the bond launch they were not. Later LCF applied for authorisation and had various permissions granted but still the mini-bond product was unregulated and the commercial lending was unregulated. There was no real need, besides status in the public and investor eye for LCF, to become FCA authorised. Well they seemed fine the first year carrying out actibities without being FCA authorised, although they did apply and authorisation was later granted. It was brought up with the FCA that LCF had no intention of selling regulated investment products nor carrying out regulated business activities. Perhaps they needed some permissions later that they did not need in the first year. Tbe FCA confirmed they did need som permissions. I find it comes back to image and status that FCA approval confers. FCA considered LCFas a commercial broker, but their membership of the commercial broker association was earlier cancelled by the comercial broker association before bond launch as LCF was a direct lender not a broker.

Some business to business loans are regulated, for example, if a loan is secured on a director's primary residence (even as a second charge) then it must be done as a regulated agreement and the lender would need authorisation. Loans that included a personal guarantee would also be subject to regulation I believe. Credit broking is also a regulated activity, and a permission LCF held, presumably so it could operate within its company structure and ring-fencing, involving Global Security Trustees Limited. I can't recall whether the trust structure was in place in the earlier days. I don't doubt authorisation was seen as a useful tool to lend credibility to the sales operation in any case.

masonic

dunstonh wrote: »

Responses from the FSCS tend to be generic. So, maybe this person asked if the "fixed rate bond" gets protection and FSCS answered thinking it was a fixed term deposit.

It was clarified later in the interview that the individual who received the letter from the FSCS saying he may be covered was under the impression he's received financial advice.

Supercalafragalistic

Looks like ernst and young were the comapny of choice to look at the books in tne good old days too:-
https://www.leagle.com/decision/infdco20130627a86

Ray_Singh-Blue

Edit; Reflecting that I feel many investment schemes operate first for the benefit of those who run them. If investors also benefit, that's good but may not necessarily be the prime motivation of those offering the scheme. Like Adam Smith said: we eat bread, not through the bakers concern for our wellbeing, but through his own self interest

londoninvestor

Brian65 wrote: »

The only Ad I have seen says Capital at Risk
Not as bold as the interest rate but clear enough.

Rather outweighed in that ad by the misleading reference to "savings", and the false statement that the product was ISA-eligible.

chockydavid1983

It's hard not to feel sorry for those who've lost money here but at the same time, it's hard to understand how someone would invest significant money in something without investing an equivalent amount of time researching it.

boo_star

chockydavid1983 wrote: »

It's hard not to feel sorry for those who've lost money here but at the same time, it's hard to understand how someone would invest significant money in something without investing an equivalent amount of time researching it.

I really can't feel sorry for people in this instance.

An ISA offers 8% and everyone else is offering 1.5-1.7% tops and that isn't a massive red flag?