London Capital and Finance

edited 1 September 2016 at 1:14PM in Savings & Investments
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  • daniel80daniel80 Forumite
    233 Posts
    But as I explained to him it is 100% safe, he should not be gambling with money needed for a deposit. 25K in highest paying interest account he can find and then set up s/o for help to buy isa.
  • bigfreddielbigfreddiel
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    What's a help to but ISA?

    Is it one where they say yes but, no but,......

    fj
  • If an offer looks to good to be true it probably is. I am so glad I read this page .
  • edited 8 March 2016 at 11:19AM
    PropertyPlayerPropertyPlayer Forumite
    4 Posts
    edited 8 March 2016 at 11:19AM
    Up-front apologies for a possibly controversial first post, but no offence intended.


    Re the HtB ISA amounts, the max in 2 years is (£1000 + 24 x £200) £5,800 - I guess you calculated the first year and doubled it, without allowing that the initial £1000 is a one-off; HtH
    With interest and termination bonus, that would turn into about £7.5k towards deposit - around a 15% return?


    re the OP, I'm not an expert but I don't see any evidence for the scathing responses, which also lack some accuracy:


    1. FSCS is the savings compensation scheme (which doesn't cover this or peer-to-peer - P2P - lending), not the regulator which is the FCA and according to the website DOES cover this scheme.


    2. There are several warnings relevant to investment being full-term and not guaranteed, which are always applicable in investment - rather than savings - scenarios; higher returns from higher risk.


    3. One of the specific conditions is that clients have no more than 10% of funds in this type of scheme, meaning a limit of £2.5k in the OP - which is below the minimum investment level accepted making this particular scheme a non-starter or the OP anyway!

    Please note I do not have any connection with LC&F, but has anyone any actual experience or knowledge of them? These bonds seem on a par with higher-rate P2P but much less effort, and I'm seriously considering it! TIA - Steve
  • edited 8 March 2016 at 1:10PM
    jimjamesjimjames Forumite
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    edited 8 March 2016 at 1:10PM
    re the OP, I'm not an expert but I don't see any evidence for the scathing responses, which also lack some accuracy:
    You may actually want to reconsider your views as it appears you are the one that isn't accurate in facts. I think most people here have a lot more experience and can see past the marketing spiel.

    The website seems very clear:

    - In the event that these borrowers default on the loans, investors are likely to lose some or all of their investment. Investment in the bonds of London Capital & Finance is therefore speculative and involves a degree of risk
    - Interest payments are not guaranteed if the borrower defaults
    - LC&F is registered with the FCA for consumer credit activities

    It is NOT registered for investments so these are non regulated investments where you can lose 100% of your money and also not get interest paid.

    It is not like a normal investment where you can assess the risk and make a decision and ARE protected by FSCS. Far better to invest in the stock market in a balanced fund where 100% loss is not possible unless the world is destroyed and are covered by FSCS/FCA regulation.

    Please note I do not have any connection with LC&F, but has anyone any actual experience or knowledge of them? These bonds seem on a par with higher-rate P2P but much less effort, and I'm seriously considering it! TIA - Steve
    I can't see how they are on a par with any investment that is either regulated or offers lower risk. Less effort for more return would suggest to me that you have a much higher likelihood of losing all your money.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • edited 8 March 2016 at 1:28PM
    bowlhead99bowlhead99 Forumite
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    edited 8 March 2016 at 1:28PM
    re the OP, I'm not an expert but I don't see any evidence for the scathing responses, which also lack some accuracy:


    1. FSCS is the savings compensation scheme (which doesn't cover this or peer-to-peer - P2P - lending), not the regulator which is the FCA and according to the website DOES cover this scheme.
    No, FSCS is the Financial Services Compensation Scheme. It is not specifically for savings (depositary accounts with £75k limit) but can also cover failure or fraud where you have a claim against a regulated investment business (eg broker, platform, advisor) who has wronged you; the limit is £50k instead of £75k for such cases.

    However, in respect of these loans, which would be made as unregulated investments, you have no recourse to FSMA, FOS or FSCS.

    The regulator (FCA) doesn't 'cover this scheme' in terms of giving you any kind of protection against things going wrong. He just gives a consumer credit licence to the company because from the perspective of the SME borrowers, the company is helping finding them some loan finance so presumably it needs one (depending on exactly what type of borrower it facilitates the loans for)

    2. There are several warnings relevant to investment being full-term and not guaranteed, which are always applicable in investment - rather than savings - scenarios; higher returns from higher risk.
    You are right of course, investment risk, counterparty risk etc are all relevant to all sorts of investments. The OP didn't want investment risk because her son needed the funds to buy a house in 2 years. So it was worth pointing out that this scheme could allow 100% loss of capital and was not at all comparable to lower interest bank accounts. This is not misinformation and didn't lack accuracy.
    3. One of the specific conditions is that clients have no more than 10% of funds in this type of scheme, meaning a limit of £2.5k in the OP - which is below the minimum investment level accepted making this particular scheme a non-starter or the OP anyway!
    We don't know the OP's full circumstances. To get the information they would indeed need to sign off (self certify) on one of the qualifying criteria that stops the promotions being promoted to all and sundry. Personally I could buy this without bothering about some 10% "restricted investor" limit as I would use one of the sophisticated investor or high income or high net worth criteria.
    Please note I do not have any connection with LC&F, but has anyone any actual experience or knowledge of them? These bonds seem on a par with higher-rate P2P but much less effort, and I'm seriously considering it! TIA - Steve
    I don't see how it is much less effort than higher rate p2p. Both require your providing personal details, a bunch of cash, and critically evaluating an investment opportunity.

    I have no direct experience with them either. The standard advice on this and similar threads for members of the public to not get involved with things they don't understand with money they can't afford to lose, and for them not to consider an unregulated investment opportunity to be comparable with traditional regulated opportunities, is fine, whether or not it comes across as "scathing". Better to be overcautious than over-aggressive.

    If you are more sophisticated and can afford the potential losses in pursuit of the potential gains, and have had professional advice about it, or are happy to go ahead without advice, then of course, go ahead.
  • dunstonhdunstonh Forumite
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    1. FSCS is the savings compensation scheme (which doesn't cover this or peer-to-peer - P2P - lending), not the regulator which is the FCA and according to the website DOES cover this scheme.

    The FCA is the regulator and does not cover anything. FSCS protection is important on retail products and a concern for people who would normally only deal with deposits.
    2. There are several warnings relevant to investment being full-term and not guaranteed, which are always applicable in investment - rather than savings - scenarios; higher returns from higher risk.

    However, regulated retail investments work to a higher standard and have greater consumer protection than unregulated investments. For example, a regulated retail investment gives you access to the FOS. An unregulated investment does not.

    Remember that the OP was looking at a 2 year timescale. Totally unsuited for this investment.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thanks for the foregoing responses to my post, which provide significant clarification to the thread and indeed very interesting and useful further information, especially I would imagine to others like myself who are fed up with the dismal returns on traditional savings products and are seeking more lucrative alternatives.


    I fully understand the LC&F bond scheme was totally unsuitable for the OP for many reasons, but resurrected the thread because I was interested in any specific feedback having recently become aware of them.


    It was good to see daniel80 chose the high-interest account max-ing 2 x HtB ISA - a(nother) success for this forum! Unfortunately I am not eligible for one, but have begun funding them for my children. I simply highlighted that this option could give a much higher return on the amount funded compared to the bond mentioned, whose minimum investment figure is close to a HtB ISA over 2 years.
  • bowlhead99bowlhead99 Forumite
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    It was good to see daniel80 chose the high-interest account max-ing 2 x HtB ISA - a(nother) success for this forum! Unfortunately I am not eligible for one, but have begun funding them for my children. I simply highlighted that this option could give a much higher return on the amount funded compared to the bond mentioned, whose minimum investment figure is close to a HtB ISA over 2 years.
    You'd mentioned that putting 1000 starting amount and 200pm for 2 years would give ~7500 which is about 15% return. But clearly as the money is not going all in at the start, but is instead only being dripped in and most of it isn't deployed for the full two years, the return is much better than a 15% AER - it's more like 25% annualised on what's actually been invested.

    Or perhaps you were ignoring the time value of not needing all the money up front and being able to do something else with it while drip feeding the ISA, and were just considering the 5800 being committed into the ISA on day one and received back after two years at 7500. That would be a compound rate of 13.7% annually.

    So, it wasn't entirely obvious whether you were trying to overplay or underplay the potential returns from an HTB ISA vs the alternatives, especially when you then went on to say that the other people's comments lacked accuracy before giving your thoughts which also needed correction/clarification by others.

    As you might imagine, a public forum like this often has people with no prior posting history jumping into threads on unregulated investment to say it looks attractive and that they are considering it and that they do not have any connection with the provider - honest guv - but the scathing criticism of them is unwarranted.

    So, forgive us for being on our guard when someone is warned off an unsuitable investment product and some random newbie joins the thread to say 'hey don't criticise that, for all these reasons, I'm considering it'. We have heard it a million times before.

    Giving you the benefit of the doubt - yes it makes sense for people disappointed with 'dismal returns on traditional savings products' to look for alternatives. Some of those alternatives require thinking outside the box (e.g. high interest current accounts) or qualification criteria (cash ISAs with government bonuses) but usually 'alternatives to traditional savings accounts' would imply some other product where your money is protected and you get an interest rate. Rather than something with a temptingly higher return offering 100% loss of capital potential.

    Investments of all sorts can of course be alternatives to 'dismal returns on savings' if the money is not needed for a while and risk of loss can be mitigated by having your money suitably diversified. Most wouldn't see the prospective returns from one unregulated bond investment as being close to comparable on a risk/return basis to the return on best current/savings accounts in the market. Clearly more risk, more reward, but the difference with putting the minimum in this and using asset-backed p2p lending is that with asset-backed p2p it is much easier to spread your £x over multiple distinct opportunities rather than just letting these guys deploy your funds in whatever they like and hope they can afford to pay you out.

    Obviously spreading the risk over more opportunities across a couple of p2p platforms is more effort, but I don't buy the idea that the return here is 'on a par with p2p with much less effort' because it is perhaps not really on a par if you have the concentration risk of it all being in one product from one unregulated provider. And with the major p2p sites there is plenty of discussion on independent consumer forums where people sit around all day discussing the merits of providers and offerings, while there are no forums set up to discuss LC&F.

    So, I don't think you'll get specific unbiased feedback on LC&F here because they are just one provider's investment offering in a sea of tens of thousands and people here aren't really using them ; the threads like these which spring up from time to time are generally more concerned with helping naive savers avoid losing their money so are necessarily quite negative. There are loads and loads of threads where people put serious money into unregulated investments which promised better rates than the competition and turned out to be unwise - see for example 'los pandos vineyard' further down the front page.
  • @bowlhead99;


    Thank you for your exhaustive response.


    As far as the HtB return, although financially accurate, I'd contend your former scenario is unrealistic overall, because the balance for ongoing funding would need to be accessible, so would probably add 1%+ to your second calculation, giving almost exactly the 15% of my original approximation! so I wasn't trying to exaggerate either way, just being realistic.


    I appreciate your comprehensive overview of the pros and cons of various schemes, and take on board your opinion of this forum's perspective, but this thread was the only one I saw which specifically mentioned LC&F, which is why I hoped someone with specific knowledge/experience of them might respond and save me some legwork! Meanwhile I'll continue my quest.

    bowlhead99 wrote: »
    Giving you the benefit of the doubt -


    Thanks for that, which is warranted! I'll also look for some other threads as mentioned in your final paragraph to further my investment education - cheers
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