London Capital and Finance

James_Green_1982

adindas wrote: »

People who visit this MSE forum regularly should already aware about the LC&F. There are already huge amount of warning in this forum. It seems they are using a boiler room technique to practice "pump and dump" scheme.

It might they just lend the money to their own business, friends and then run away with the money after moving/ hiding the money they have taken.

Nothing I've read suggests 'boiler room' or 'pump and dump' techniques.

It seems like a very high risk and quite opaque debt investment, with very high referral fees added in...

AnotherJoe

masonic wrote: »

From some of the discourse coming from the facebook groups, it is clear some are strongly urging the administrators to pursue this at £500 per hour (or some similar highly inflated hourly rate) at the cost of all bondholders, and with very little hope of success. There are very clear rules governing when the FSCS does and does not apply.

I disagree they are clear, at least in the way they are implemented and the way FSCS allowed LC&F to use their backing in a misleading way for so long.

For at least three years after being warned by an IFA (rather than just joe public complaining although that was happening also) , FSCS (and advertising standards) allowed those highly misleading ads about being covered by FSCS to continue until they pulled them end of last year because they were misleading.



I think there's a case to be made that by allowing the ads to run for so long, FSCS gave the impression the bonds were covered rather not just any financial advice that LC&F gave. (thats the case is it not, that financial advice by LC&F was covered?)
Also, in which case, if someone called LC&F, required about the bonds and were advised by them to buy, would they not be covered since they received advice? Whereas if i just bought some without discussing the background then i didnt receive advice so i wouldnt be?


The whole thing is a big ugly mess and FSCS and advertising standards dont come out of this covered in glory but soemthing smellier, I recall posts here years back where someone complained and got passed back and forth between the two with no action. If the ads were misleading in 2018 why weren't they misleading in 2015?
Add to the mess, it seems it may not just be a case of the bond went south because the investments were mismanaged, but it went south allegedly because of underlying fraud as indicated by recent arrests. In that case, would FSCS guarantee not cover losses arising from such alleged fraud were it to be proven?
I'd say one thing it certainly isn't, is "clear" and whilst i do think the buyers of these bonds were foolish to purchase, i dont blame them for spending a few £k, even hundreds of £k, they looking to see if they can get redress for millions. Even if its a hundred to one shot, the ratio of return would be thousands to one so it's a bet worth taking.

Realistic

IOG announced this morning that Smith an Williamson were going to be appointed administrators to London Oil and Gas the largest borrower from LCF.

As administrators they will be able to comb the books and records of one the key borrowers.

I suspect they will also be appointed to other of the borrowers.

jimjames

keyboard_warrior wrote: »

I do feel for those that have lost out but struggle to understand how their desire to invest and be suckered by confirmation bias is not anything other than greed.

Especially as in hindsight most of the investors agree this was too good to be true but are still struggling to come to terms with why and how they fell for the scam and take responsibility for their actions = cognitive dissonance..

I think the most frustrating thing when this first broke and the evidence was shown of the linked companies, loans to dormant companies etc that there was still such denial from many bondholders that slavishly followed the LCF line that everything was fine.

To me if a company is prepared to lie and mislead to make a sale to unsuitable punters then anything they say should be considered in the same light. This has been reiterated by subsequent events.

London Oil & Gas goes into administration after borrowing £122million

https://damn-lies-and-statistics.blogspot.com/2019/03/london-oil-gas-adminstration.html

jimjames

AnotherJoe wrote: »

I think there's a case to be made that by allowing the ads to run for so long, FSCS gave the impression the bonds were covered rather not just any financial advice that LC&F gave. (thats the case is it not, that financial advice by LC&F was covered?)

LCF were not authorised to give advice. Their only authorisation was for loans. If I call my authorised insurance company then can't give me advice on investments.

AnotherJoe wrote: »

Also, in which case, if someone called LC&F, required about the bonds and were advised by them to buy, would they not be covered since they received advice? Whereas if i just bought some without discussing the background then i didnt receive advice so i wouldnt be?

As far as I'm aware nobody called LCF. They called Surge who managed the calls on behalf of LCF, hence the £60 million payment for those services. I believe LCF had 6 staff including directors.

AnotherJoe

jimjames wrote: »

LCF were not authorised to give advice. Their only authorisation was for loans. If I call my authorised insurance company then can't give me advice on investments.


As far as I'm aware nobody called LCF. They called Surge who managed the calls on behalf of LCF, hence the £60 million payment for those services. I believe LCF had 6 staff including directors.

Ah. And I guess Surge weren't covered? So is that illegal for them to be to be giving financial advice in that case? OR, if Surge were doing it "as an agent " LC&F, arent LC&F still covered?

Though quite a few of those feefo reviews mention calling LC&F not Surge. Do you think were actually calling Surge?

Malthusian

James_Green_1982 wrote: »

Nothing I've read suggests 'boiler room' or 'pump and dump' techniques.

Surge's websites (top-isa-rates.co.uk and best-savings-rates.co.uk) were the boiler room. The technique may have been modernised but the principle is the same.

Also, investors reported earlier in this thread that the moment they put their phone number into LCF's website, they received a call to "help them through the application process" - while they were still in the middle of the application form. That's pure boiler room.

The eagerness to get their money should of course have rung alarm bells, but just as novice investors dissatisfied with cash interest rates were susceptible to being offered 8% from an apparently considered risk, investors dissatisfied with the impersonal nature of modern banking were susceptible to a financial institution which actually rings them up and speaks to them in an English accent.

Blame the victims for being susceptible if you really must but being less clever than the directors of an unregulated investment scheme is not a crime.

In reality "Who is responsible for the collapse of an unregulated investment scheme" ≡ "Who has the money right now".

Malthusian

AnotherJoe wrote: »

Ah. And I guess Surge weren't covered? So is that illegal for them to be to be giving financial advice in that case? OR, if Surge were doing it "as an agent " LC&F, arent LC&F still covered?

Though quite a few of those feefo reviews mention calling LC&F not Surge. Do you think were actually calling Surge?

Surge ran LC&F's call centre so "calling LC&F" = "calling Surge".

LCF could have covered their donkeys by having a recorded message saying "LCF can give you information on our products but is not authorised to give advice blah blah". It matters little as the call centre was apparently saying all sorts of things they shouldn't have - the idea that LCF loaned to hundreds of companies instead of a handful seems to have come from there. Whether their salesmen were also crossing the line from generic guidance and information to regulated advice simply sits alongside their blatant porkies.

There is of course no proof that Surge's sales monkeys were giving advice or telling porkies about hundreds of loans beyond the consistent and repeated statements from multiple investors and prospects on this forum and elsewhere. It is highly unlikely any recordings exist, so for this to be part of any case the SFO would have to rely on witness statements.

rr755507

keyboard_warrior wrote: »

I do feel for those that have lost out but struggle to understand how their desire to invest and be suckered by confirmation bias is not anything other than greed.

Is it greedy to want a 2.5% mortgage rate rather than a 3.0%? It is greedy to want 2% savings rather than 1.5%?
I think greed is mostly irrelevant and unhelpful - the common theme with those that were scammed is lack of financial knowledge, inability to understand risk and giving too much trust to salesman.

keyboard_warrior wrote: »

Especially as in hindsight most of the investors agree this was too good to be true but are still struggling to come to terms with why and how they fell for the scam and take responsibility for their actions = cognitive dissonance.

Sadly, I am not sure if this is true for most LCF investors. From the FB groups it is clear, most people just don't understand the risks they were taking with these types of unregulated products. Many are going to fall for the same thing, and lots of already have.

Malthusian

masonic wrote: »

There are very clear rules governing when the FSCS does and does not apply.

That will be news to the investors in ARM (initially refused a payout, investors challenged this and won), investors in scams facilitated by Berkley Berk and other dodgy SIPP providers (the case continues), and the investors in Secured Energy Bonds and Providence Bonds (FOS initially refused to even look at claims against the FCA-regulated firm that approved the marketing material, then changed its mind after a legal challenge, FSCS claims against that firm are now in progress).

The rules may be clear but the application of them is not. The FSCS' favourite phrase is "oh, go on then, but don't tell your mother".