London Capital and Finance

Spelunthus

It's a big shame, and very probably a crime somewhere. All we can do is to bang-on about "Understand what is being said", "If it looks too good, it's probably a trick".

The level of financial ignorance in the general population is depressing. Then there's rank stupidity, and outright greed. Then there's con-men and tricksters. Then there's simple fraud and plain crime.


For me, I favour much more transparency; discuss your finances in the family, with friends & colleagues, and on social media - that way, SOMEONE may call out with good advice, before you make a bad move.

Many who get burned are the loners,the misers, the hoarders, the elderly (who are less connected), and the hard of learning.

Sledger

Malthusian wrote: »

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.

So telling porkies involves the SFO or this purely to get info to implicate Surge? . If the SFO are using Porkies against LCF is that FAR MORE SERIOUS crime than opearting a Ponzi scheme and putting the money in their pockets which should be a easy trail to follow and charge them but instead they released them HOW? Are they waiting to charge LCF for bodholders phone calls telling porkies when they already have the LCF IM full of them

bxboards

Malthusian wrote: »

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".

I think you and I have had this discussion before but I can't fathom how or why FSCS should be on the hook for a product than unambiguously advertised itself as 'not FSCS protected' and 'your capital is at risk'

I completely disagree with a carte blanche underwriting of any investment which seems to be the way its going - this actually penalizes sensible investors sticking money in FSCS 0.1% bank accounts - if they know there is a risk free bail out from the FSCS it would encourage more people to pile in - hell why not as the FSCS will pick up the tab!! It probably would encourage more investment into similar schemes in the future by more people if the FSCS can be seen as a bail-out option in these cases.

Sorry I'm not shooting you as a messenger, the principle behind a bail out when a scheme is explicitly advertised as not protected by said bail-out scheme worries me.

Uxb1

This has always been the problem over any safety net type.
It encourages exactly the sort of behaviour you point out.

It already happens with credit cards and the section 75 guarantee - why both checking if the offer is a scam when you just shrug your shoulders, pay by credit card and who cares if they go bust - the CC firm picks up the tab- paid for by sky high interest rates.

It was the same when Bradford and Bingley B.Soc were about to go under, offering the best rates bar Icesave and I like others did not care because I knew my wodge was going to be protected by the FSCS and the cost would be paid for by in effect other savers and investors though the FSCS levy on financial groups and IFA's.

There is a valid argument for actually removing all FSCS protection completely.

Malthusian

As a general principle, the damage caused by compensation schemes in terms of "moral hazard" is outweighed by the benefit to the economy from ordinary people being able to use the financial system with confidence.

If the UK did not have a compensation scheme, then far more people would keep their money stuffed under the mattress, because if you handed it to a financial institution you could never be confident that you were ever going to get it back. Alternatively, they would bank with institutions overseas where a compensation scheme does apply.

Literally nobody invested in LCF thinking "I may as well grab the 8% rate because the FSCS will bail me out if it goes tits up, even though the website explicitly says it won't".

I have no strong feelings on whether the LCF investors should get FSCS compensation. If they don't then they join the hundreds of thousands who've lost their life savings in scams before them, life's a ladydog; and if they do get their money back I certainly won't be p-ing on their chips while moaning about moral hazard.

Either way the cost of the collapse falls on the general public, and the only question is whether it should fall specifically on the 11,000 of the public who were misled, or spread across the 63m adult general population.

I think you and I have had this discussion before but I can't fathom how or why FSCS should be on the hook for a product than unambiguously advertised itself as 'not FSCS protected' and 'your capital is at risk'

The argument is that LCF missold the bonds (this is already established) and is therefore liable to the investors on the grounds of misselling, and this liability for misselling should be covered by the FSCS. It's a partially untested argument. Catalyst and IPM were different because the claim was against a third party to the actual investment. In this case LCF didn't need a third party because the FCA only went and authorised it.

James_Green_1982

Spelunthus wrote: »

It's a big shame, and very probably a crime somewhere. All we can do is to bang-on about "Understand what is being said", "If it looks too good, it's probably a trick".

The level of financial ignorance in the general population is depressing. Then there's rank stupidity, and outright greed. Then there's con-men and tricksters. Then there's simple fraud and plain crime.

Many who get burned are the loners,the misers, the hoarders, the elderly (who are less connected), and the hard of learning.

I agree. There's a question as to why financial matters aren't (or weren't) taught in schools.
Some may say it's to maintain an advantage among the wealthier classes. Others may say it's due to a lack of suitable teachers and/or a fear of liability for later claims of education crossing the line to advice.
Either way, it's a much under-discussed topic.

James_Green_1982

Spelunthus wrote: »

It's a big shame, and very probably a crime somewhere. All we can do is to bang-on about "Understand what is being said", "If it looks too good, it's probably a trick".

Many who get burned are the loners,the misers, the hoarders, the elderly (who are less connected), and the hard of learning.

That's a logical argument - but I'm not sure it's true.
I suspect those who get caught out are those who have neither the time nor the interest to learn about their financial options etc.
I would imagine that the ''loners or misers'' you describe would have more time to research (and in this case they obviously had internet access) their options than your average busy working parents etc.

RG2015

Treasury Committee chair Nicky Morgan has asked the City watchdog and the Treasury to launch an investigation into the mini-bond seller London Capital and Finance.

Nicky Morgan said: "I have requested that the FCA Board consider whether the failure of LC&F, the potential harm to those consumers involved, and the regulatory system that led us here, warrants a statutory investigation.

“If the FCA decline, I have asked HM Treasury to consider using its power to require the regulator to conduct such an investigation."

What took her so long?

Perhaps now it is in the mainstream media there is some political capital to be made.

https://www.bbc.co.uk/news/live/business-47583404/page/2

http://www.cityam.com/274885/nicky-morgan-calls-investigation-into-possible-regulatory

Supercalafragalistic

Where did elten go from this thread...he seemed really well informed?

jimjames

Supercalafragalistic wrote: »

Where did elten go from this thread...he seemed really well informed?

He might have had other things on his mind

https://damn-lies-and-statistics.blogspot.com/2019/03/london-capital-finance-arrests-sfo-fraud.html