London Capital and Finance

bail-in

TRUSTPILOT REVIEWS OF LC&F

https://uk.trustpilot.com/review/www.londoncapitalandfinance.co.uk

The above link to trustpilot reviews of London Capital and Finance give some idea of the problems faced by customers requesting commercial due diligence from LC&F.

masonic

bail-in wrote: »

TRUSTPILOT REVIEWS OF LC&F
<snip>

Strange how the Trustpilot review refers to your Mini Bond Review hosted on your weebly site. I wonder who the author could be.

Holeydel

cloud_dog wrote: »

Au contraire slack bladder. Please refer to my previous post with your quote.

Unfortunately for you, you don't come across as wanting to learn, as you put it, simply defend a position (nee product).

Someone who admits to not knowing sufficient details about an investment product would surely want to obtain and understand more information about the product they have invested in, especially when it is an extremely high risk product with no worthwhile guarantees. No?????

My position is I put money into a product and I can do !!!!!! all about it except hope they come good! That's pretty much my position summed up there. And I absolutely agree with your second part. Spot on that. The difference is the methods I and you would have taken. I spoke to them on the blower, was told they secure they loans against property and assets exceeding the loan value and only a doomsday scenario would see the investors lose out. And then I went to the FeeFoo reviews. Your research into the company would have gone much deeper I imagine, but again, the reason I'm here is to get a better understanding of what options are out there and how they work. In hindsight my approach wasn't particularly thorough, but at the time I thought it was enough.

Holeydel

EachPenny wrote: »

In your first post you said:-


As a newbie, you ought to be able to appreciate that your words come across as advocating people join you in this investment. You might not exhort them to do so, but combining words like "viable option" and "better use of" has the same effect as 'suggesting people join [you]'.

Your words are also directed at people using "high street banks" for their "savings" which - as experienced posters on the thread say regularly - are probably not the kind of people for whom this kind of product might be suited.

You might not have intentionally advocated for your investment choice - I'm sure we are all happy to give you the benefit of the doubt - but the way you have gone about things would leave other investment novices thinking that you are suggesting people "join [you]".

Thank you for being more friendly in your approach with this one EachPenny. I see what your saying, however my same post does give a lot of info about me, that I'm new, not clued up and the why's and reasons I went the route I did. I was also sure not to praise or recommend the way I've gone because I have no basis or results to back it up, other than to say it's going alright so far. I said this to raise flags, so readers are aware that I'm not in a position to advise or recommend and also to open the door to better knowledge on this subject. I've got it too. I might have copped a bit of stick and gone round some circles but it was worth it, though it might take another day to let go of being called an American.

EachPenny

Holeydel wrote: »

Thank you for being more friendly in your approach with this one EachPenny. I see what your saying, however my same post does give a lot of info about me, that I'm new, not clued up and the why's and reasons I went the route I did.

Absolutely, which clued up people would instantly recognise as the clasic empathetic sales technique. 'You and me are the same, we have the same dreams, we have the same problems... let me tell you how I decided to solve them...' (for clarity, this is not a direct quote)

Perhaps not your intention, but someone lacking experience might fall for your inadvertent sales patter. (Have you considered a career in sales btw? You appear to be a natural.)

Holeydel wrote: »

I was also sure not to praise or recommend the way I've gone because I have no basis or results to back it up, other than to say it's going alright so far. I said this to raise flags, so readers are aware that I'm not in a position to advise or recommend and also to open the door to better knowledge on this subject.

Perception is what counts here. Let's agree to disagree.

cloud_dog

Holeydel wrote: »

I spoke to them on the blower, was told they secure they loans against property and assets exceeding the loan value and only a doomsday scenario would see the investors lose out.

I'm sorry but this statement highlights how very naieve you are or you are being deliberately obtuse.


Why wouldn't they say that to you :rotfl:

If you think that the only risk to your investment is a doomsday scenario then you need to pray you get your money back. Hopefully you will, and when you do run away from this type of investment as fast as you can. You are not suited for this type of investment. Neither are the vast majority of people in this country.

Alexland

Holeydel wrote: »

I spoke to them on the blower, was told they secure they loans against property and assets exceeding the loan value and only a doomsday scenario would see the investors lose out.

Did they actually say that or was that your interpretation? They should have told you the risk statement on their website specifically 'Investing in the bonds carries significant risk and you may lose part or all of your investment."

https://www.londoncapitalandfinance.co.uk/disclaimer

Alex

Holeydel

If you were to take everything I said as a whole EachPenny, I believe I would be a terrible salesperson!

This is what they said to me Alex. Obviously not in those exact words but certainly the 'doomsday' was there. I recall them mentioning not being FCA authorised & they went into a bit more detail, but what I wrote was the jist of it. The mention of losing capital & getting less than one puts in was (& is) also there, however this is a term I associate with many types of investments, from funds, stocks, shares etc so it wasn't particularly unusual at the time. Now I'm aware that there's risk of investments losing capital & being taken to the cleaners, so to speak.

They had to tell me something Cloud Dog. Securing loans against assets sounded good. Is it true? Who knows? These weren't Q's I asked myself back then. I may be incredibly naive, but if it's to be believed then LCF has raised £214m to date, Funding Circle claim £3.8 billion. As sad as it is, I'm not alone at being wreckless with my savings.

I'm only writing this to give you a perspective of where I'm coming from, how & why someone would enter such a scheme. Come January I'll take everyone's advice when I'm due to receive my first investment back [enter joke here] & look at putting it into a fund of some sort. Your comment haven't been in vain, thanks.

masonic

Holeydel wrote: »

Securing loans against assets sounded good. Is it true? Who knows?

With LC&F, there is no way of knowing. However, assuming it is, the assets being used to secure the loans may be a trading business, or capital equipment, or a development site. These will have been valued on the assumption that the business continues to trade profitably, or based on the potential value of the completed property development.

The reality is if the borrower stops making repayments on the loan, then it's because the business is no longer trading profitably (or at all), or the property development has stalled and it is a half completed building site. A business that has ceased trading is worth a lot less than a trading business, capital equipment is worth a lot less when it is second hand and been sitting around in a disused building for a while, and a half-completed building site is worth a lot less than a building that can be rented out or occupied. If the borrower is in Administration then the sale of the assets might cover the Administrator's fees and not leave much left to repay investors.

The good news is companies like LC&F don't risk any of their own money in these loans, so they can carry on making upbeat promises to new customers and providing them with a nice reassuring website all the while.

It may be the case that none of the borrower's own money is tied up either. They may be paying interest rates of 15-30%, and do so because nobody else will lend to them. In the P2P world there have certainly been instances of borrowers being able to take out a loan for 100% of the cost of acquiring a building, plus 100% of the development costs, plus 100% of the interest payable on the loan. If something goes wrong, they can just walk away and leave people like yourself to suffer 100% of the losses.

bail-in

Regarding my post above #274 about the FSCS, the UK Deposit Protection Scheme, I would like to add to that post, and pointing out I was incorrect about the Austrian withdrawal from their bank deposit protection scheme after not reading it more thoroughly.

The European Central Bank (ECB) pressed re the development of the Bank Recovery and Resolution Directive (BRRD) regulations (specifically re the bank failure tool kit bail in rule) to include all protected deposits to be confiscated by the sovereign bank under the tool kit bail in rule process in the circumstance of a failing European and Anglosphere bank. Fortunately, and so far still, the Federal Reserve and the Bank of England did not agree to such implementation in the BRRD. However, the ECB was still of the same mindset, but not the European political bodies, and may be quite happy to see European countries abolishing their bank deposit protection schemes, or at least confiscation in a systemically important banking crisis of all depositors assets including deposit protection scheme insured assets.

Perhaps the ECB considers that the end users, the people namely financial investors and depositors, should burden on both shoulders (confiscation and taxation) the self created financial failures of systemically important banks. Regarding confiscation, under the BRRD now legally implemented throughout all European and Anglosphere countries, the confiscation or bail in of all shares and all deposits to pay off the debts of the failing financial institution. The ECB, trying to avoid any future government bail out, attempted to include in the bail in those savings deposits covered by deposit protection schemes. Fortunately, the Federal Reserve and the BofE did not agree with the ECB.

However, as the BRRD and bail in rule are lawful in the UK, it now only takes one hour for the PRA to close all the share and bank depositor accounts on entering to resolve a failing bank. This means no bill has to be passed in Parliament which takes a week to be reviewed and passed to become law as happened with Northern Rock. The press present at the first reading re the resolving of Northern Rock gave readers a week resulting in a run on Northern Rock accounts by depositors. No chance today. Depositors would have one hour or so as the BRRD bail in tool box rule is already statutory law, assuming they unlikely new what was happening.

Currently, in the application of the bail in rule, there is little chance of a run on a failing bank and depositors recovering their money. One good reason why savers have been moving money from banks to NS&I where the BRRD and tool kit bail in rule do not apply and deposits are 100% protected by HMRC. Yay! Still even in this failing systemically important bank scenario, London Capital and Finance does not look in the least bit attractive! Nor the other unprotected mini-bond offers in the financial market. ☺

With the legal introduction of the BRRD in the UK on 1/1/2016 and practically giving the UK banks an additional one year to implement, the tool kit rules including the bail in rule became practical law on 1/1/2017. No bank can now honestly say savers' deposits are 100% safe. Firstly, savers could lose them anyway if the bank goes bankrupt and is liquidated, which the government would try anything to stop, and secondly could also lose the value of confiscated deposits above the £85,000 protected value in the bail in rule. Thirdly, if the PRA cannot cover the bank's or banks' debts with the value of the confiscated shares and deposits, as depositors have no legal contract with the FSCS, the PRA as executive arm of the BofE and applying the BRRD with every legislative statutory backdoor (exceptions to the rule) could in theory simply call the FSCS and tell them to remove the protected failing bank deposits from protected status giving the PRA access to those protected deposits to further pay off the failing bank's or banks' outstanding debts. From a practical financial and political perspective it could be argued it would be the best approach by the powers that be. However, it is doubtful long suffering low interest savings depositors would agree and they would probably not vote for that political party again! Of course, the government could fall back on bail out again, but that defeats the whole purpose of the implementation of the BRRD and the tool kit.

The above is not in the ruling government interest politically, but it is a possible scenario if more than one systemically important bank is failing. Of course the government would raise taxes and could borrow it's way out but just think what interest rate the lenders may charge under such dire circumstances. On second thoughts, do not think about it! &#55357;&#56842; Printing more money, as Venizuala has found, has its own problems and could trigger hyperinflation and devaluation of the pound.

One further point, in relation to Reaper's point in his above post about how the FSCS is funded by financial institutions rather than the BofE, it may be unlikely that the FSCS could cover protected deposits even in one failing systemically important UK bank. Note UK important banks are still under capitalised (a BofE allowed 6% capitalisation, nearer 4% in real terms). That is not at all good if any of the above painted scenarios occur. And that is without even looking into the current $trillions derivatives bubble created by the same financial institutions in the USA that precipitated the 2008 financial crisis. Business as usual!