London Capital and Finance

nrsql

dunstonh wrote: »

I hope that fails.

Regulated advisers pay levies to the FSCS because the advice they give is regulated. Unregulated advice pays nothing towards the FSCS as the advice is not regulated.

The consumers of regulated firms will be picking up the tab for those that tried to bypass those regulated firms.

Whats next? Buy shares in loads of high risk companies and then let the FSCS kick in when it fails?

Haven't read the article but I guess they will order the company (Surge?) to refund if they are found to be giving product advice rather than FSCS compensation.

Malthusian

You don't have a claim on the FSCS if you are "advised" by a man down the pub or someone else who isn't authorised to give regulated financial advice.

While LCF was (unbelievably) authorised to give advice, it was for corporate finance business only, so whatever investors were told over the phone, they weren't being given regulated advice.

GDB2222

Malthusian wrote: »

You don't have a claim on the FSCS if you are "advised" by a man down the pub or someone else who isn't authorised to give regulated financial advice.

While LCF was (unbelievably) authorised to give advice, it was for corporate finance business only, so whatever investors were told over the phone, they weren't being given regulated advice.

I don't really understand that. Are the public meant to check the precise extent of any authorisation? If an advisor accidentally oversteps the mark slightly then that advice is simply unregulated?

Seabee42

If your investing money then yes you have a duty to do some checks especially if your buying with greed into something that is quite frankly to good to be true. Then do not expect to be bailed out for your greed when it turns sour.

Malthusian

GDB2222 wrote: »

I don't really understand that. Are the public meant to check the precise extent of any authorisation?

Yes. That's what the FCA register is for. Unless they are happy to be liable for their losses if it turns out the guy advising them wasn't authorised and they weren't covered by the FSCS. Then they don't have to bother.

Or unless the chances that they are dealing with someone who isn't authorised are vanishingly small - e.g. they are dealing with a respected and long-established IFA whom they know has been advising people for over 15 years, or a massive firm like St James' Place.

There has never been a compensation scheme that bails out anyone who is told lies and suffers a financial loss as a result. Everyone knows where that would lead.

If an advisor accidentally oversteps the mark slightly then that advice is simply unregulated?

If they are working for a business that is not authorised to provide financial advice to the person being "advised" then yes. There is no "slightly" about it. You can't be slightly authorised or slightly unauthorised.

GDB2222

It's not quite as straightforward as all that, though.

Here's the LCF authorisation, and bear in mind that Joe Public is apparently supposed to know the difference between "Advising" and "Arranging". LCF could "advise" professional clients but "arrange" for professional and retail clients.


Advising on investments (except on Pension Transfers and Pension Opt Outs)
Customer Type
Eligible Counterparty
Professional
Investment Type
Certificates representing certain security
Debenture
Future (excluding a commodity future and a rolling spot forex contract)
Option (excluding a commodity option and an option on a commodity future)
Rights to or interests in investments (Contractually Based Investments)
Rights to or interests in investments (Security)
Share
Unit
Warrant
Limitation
Rights to or interests in (both).
Agreeing to carry on a regulated activity
Limitation
Limited to carry on regulated activities.


Arranging (bringing about) deals in investments
Customer Type
Eligible Counterparty
Professional
Retail (Investment)
Investment Type
Certificates representing certain security
Debenture
Future (excluding a commodity future and a rolling spot forex contract)
Option (excluding a commodity option and an option on a commodity future)
Rights to or interests in investments (Contractually Based Investments)
Rights to or interests in investments (Security)
Share
Unit
Warrant
Limitation
Rights to or interests in (both).
Credit Broking


Making arrangements with a view to transactions in investments
Customer Type
Eligible Counterparty
Professional
Retail (Investment)
Investment Type
Certificates representing certain security
Debenture
Future (excluding a commodity future and a rolling spot forex contract)
Option (excluding a commodity option and an option on a commodity future)
Rights to or interests in investments (Contractually Based Investments)
Rights to or interests in investments (Security)
Share
Unit
Warrant
Limitation
Rights to or interests in (both).


https://register.fca.org.uk/ShPo_FirmDetailsPage?id=001b000001m189AAAQ

Malthusian

GDB2222 wrote: »

It's not quite as straightforward as all that, though.

Here's the LCF authorisation, and bear in mind that Joe Public is apparently supposed to know the difference between "Advising" and "Arranging".

They certainly should as that's Key Stage 2 level English.

LCF could "advise" professional clients but "arrange" for professional and retail clients.

That distinction is rendered unimportant by the fact that LCF was restricted to corporate finance business only.

You can try to make it sound as complicated as you like, but the fact remains that LCF was not authorised to give advice to non-corporate investors regardless of category and claims for advice are therefore not protected. Just as if I told you to stick all your money in LCF in the pub.

That does not preclude the FSCS finding another ground to compensate them as it did for people with claims against IPM and Catalyst.

Reaper

I am more sympathetic. Most of the public don't know what regulated means. To an above average member of the public a firm is either authorised or it is not. We should not expect a pensioner searching online for a home for their life savings to need to understand any more than that.

It is something that needs to change and there are some signs the FCA is aware of it having previously warned firms about the use of the word "regulated" soon after looking into LCF.

I am expecting the result to be a solid ruling that no firm can say they are "regulated" or "authorised" by the FCA on any investor facing advertisement or correspondence unless the firm is authorised to sell that particular product to investors.

Seabee42

I sort of agree but if someone is offering you a higher return than you can get through the high street you have to ask why. No one is giving you money why would you think they would. This is just common sense.

Reaper

Seabee42 wrote: »

I sort of agree but if someone is offering you a higher return than you can get through the high street you have to ask why. No one is giving you money why would you think they would. This is just common sense.

Compared to a savings account it is high, but not excessive in the investment world.

For example apparently the British & American Investment Trust has a yield of 18.1%
https://www.theaic.co.uk/companydata/50396
and that doesn't seem to be a one off:
https://www.theaic.co.uk/companydata/50396/overview/dividends
That's so high there is probably a catch. I haven't checked as it is not one of my investments, but you get the idea.

The LCF return was high enough to make me wary, but not to automatically exclude it based on that alone.