London Capital and Finance

Jelli

Because the website had on it "FCA regulated" and an attractive interest rate. I thought while not secure was a legit UK financial institution with risks that were true to their meaning (genuine loans not being repaid, rather than made-up loans not being repaid).

jimjames

Jelli wrote: »

Because the website had on it "FCA regulated" and an attractive interest rate. I thought while not secure was a legit UK financial institution with risks that were true to their meaning (genuine loans not being repaid, rather than made-up loans not being repaid).

We still don't know for sure if loans were made up but I'm sure you wouldn't have put your money in if you'd been told it was to invest in 10 companies run by LCF directors including nearly 40% of it in timeshares and oil exploration.

Jelli

That is true.

jimjames

Another question if anyone can help

CV Resorts Ltd has a charge from LCF on its accounts which appears to relate to a loan of £5.7m from LCF. However between 2015 and 2018 there was absolutely no movement in any figures in the accounts. How is this possible if the loan is being charged 8% interest?

https://beta.companieshouse.gov.uk/company/08422800/filing-history

Aretnap

masonic wrote: »

We don't know his financial position. Hopefully he didn't invest more than 10% of his net assets though or he may struggle through the rest of his retirement.

I'm going to stick my neck out a bit and am willing to bet an e-pint that

(1) Not many of LC&F's bondholders qualify as high net worth investors,
(2) Practically none of them qualify as sophisticated investors (unless having already been scammed into investing in two other dubious unlisted companies qualifies you as a sophisticated investor) and
(3) Many, probably most, of the rest have invested significantly more than 10% of their net worth

I seem to remember that their minimum investment is (or was) £10K, which means that nobody with net assets of less than £100K should really have been investing at all.

The meaning of the questionnaire is fairly clear to me: in plain English it's asking if you're (a) rich or (b) financially savvy and experienced to a level far beyond that of the average consumer, and if you're neither then it is asking you to confirm that you are not investing more than a small fraction of your money in LC&F (or similar investments). But then I count myself as relatively financially savvy so I'm not really LC&F's (real) target market.

In theory if everyone answered the questions accurately then everyone investing would either be in a position to do their own research and fully understand what they're getting into, or at least would only be risking money that they could afford to lose.

In practice I suspect that plenty of people don't answer them accurately. The meaning of phrases like "investments which are not easily cashed in" may not be clear to the financial novice, and it may not be obvious that it included the bonds you're buying themselves. And there are so many boxes you tick on websites without really reading them... the cookie policy, the terms and conditions, the one that says please don't send me spam Emails (or is it please do send me spam Emails? Whatever). Any anyway the brochure was impressive, and the loans are all backed by assets (that makes them like mortgages, right?), and the FCA are looking out for me so I know it safe... where's the harm if I'm investing a bit more than 10% of my money? And so on and so on.


I agree that if FCA required this type of company to ask more detailed questions about the applicant's assets, then reject applications from people who didn't meet the criteria, it would give the unsophisticated more protection. It might also kill the business model of companies like LC&F more or less stone dead, which would be another plus.

bail-in

FINANCIAL CONDUCT AUTHORITY

FCA investigations

https://www.lexisnexis.com/uk/lexispsl/corporatecrime/synopsis/97312:97313/Financial-Conduct-Authority/FCA-investigations?wa_origin=paHomePage

FCA enforcement—overview

https://www.lexisnexis.com/uk/lexispsl/corporatecrime/document/391421/58TN-V8F1-F188-N4HP-00000-00/FCA_enforcement_overview#

Financial services offences

https://www.lexisnexis.com/uk/lexispsl/corporatecrime/synopsis/97312:97315/Financial-Conduct-Authority/Financial-services-offences?wa_origin=paHomePage

bail-in

FCA sets out its Approach to Supervision and Enforcement

https://www.fca.org.uk/news/press-releases/fca-sets-out-its-approach-supervision-and-enforcement

masonic

jimjames wrote: »

Another question if anyone can help

CV Resorts Ltd has a charge from LCF on its accounts which appears to relate to a loan of £5.7m from LCF. However between 2015 and 2018 there was absolutely no movement in any figures in the accounts. How is this possible if the loan is being charged 8% interest?

https://beta.companieshouse.gov.uk/company/08422800/filing-history

One explanation is that the loans were made with interest retained. That's a common practice in the P2P lending industry. In some cases the interest is borrowed as part of the loan, held by the lending company and drip-fed to investors over the loan term.

bail-in

THE FCA MUST TAKE ON A GREATER AND MORE FREQUENT ROLE IN UPDATING LCF BONDHOLDERS THE PROGRESS OF THE FCA INVESTIGATION OF LONDON CAPITAL AND FINANCE (LCF)

Is the FCA really doing all it can to inform anxious bondholders of the progress of the current and ongoing investigation of London Capital and Finance?

Work employees are often required to provide a summary of the work they have done each day, and this is made available to various corporate departments in the company. Employees often do not like doing it, but it really focuses the mind on the work in hand and the relationship between the employee, the work and the employer. Such an exercise is even more important on behalf of public bodies, including the FCA, where there is a great responsibility to the ultimate employer, the taxpayers.

There are some 14,000 LCF investors every one of them concerned, some desperately, about what is happening with the FCA investigation. Such worry may dominate the mind of the investors every day causing anxiety and other mental sufferings which can in turn affect their family and work relationships.

Just a few words can alleviate anxiousness, increase peace of mind and bring some relief. The knowingness that something is happening. Just think how that, a few words, would help to ease the suffering of thousands; especially if the news is positive rather than negative.

Words are powerful in effect. A few words, whether lies or truths, can be the seeds that bring down or save a person, a family, a corporation, an army, a whole country. Propagandists know this and use it to destroy or strengthen countries, as the Nazi Goebels was infamous for in the Second World War. There is a statement that if three different people in one day at different times independently say a same untruth to one and the same person who knew the opposite was true that person will believe the untruth by the end of the day.

I remember a law case in relation to a defendant who as a sick joke told his neighbour the lie that her husband had just died in a car accident. She died instantly on the doorstep from a heart attack brought on by shock. Did she really die of a heart attack? Or did she die from a thought, an impulse of intelligence, a conscious electrical impulse that instantly had a physically destructive effect on every cell in her body resulting in a catastrophe. The husband, the plaintiff in the civil law case was successful in sueing the defendant for loss of services of his wife.

I remember one of the first, grossly mishandled, applications of the new bail-in rule in relationship to three failng local banks in Italy, where all of the depositors in the banks had all of their deposits confiscated to cover the liabilities of the failing banks. Unfortunately many of the savings depositors were elderly retired and they were losing all of their supposedly secure, safe savings. Some retirees committed suicide. One of them left a message on his computer giving the unjust loss of his money as the reason. The local Italian press got wind of this and it went national causing uproar and shouts of injustice amongst the Italian people. Eventually the government stepped in and rightly restored all of the confiscated deposits to their rightful living owners.

Information, knowledge is power. Behind knowledge lies communication. At this point the FCA is failing. Everyday, 14,000 investors are waking up worried, anxious about the future for themselves, their families. So what do they do? They look on the FCA website for an update. They pick up the phone and ask the FCA for information, for news. What do they hear? An answerphone message to hang up as there is no further information!

There should be an encouraging update as to the FCA investigation of LCF on the FCA website every day, however little, as to the progress of the investigation. This should apply to all FCA investigations. The more investors request this the more likely it will happen.

masonic

It is not reasonable to expect the FCA to give a blow by blow account if its investigation into LCF to bondholders. For one thing, this could be counterproductive as updates will invariably enter the public domain and could tip off the directors. For another, the news is unlikely to be reassuring at this stage - the FCA is likely pursuing multiple lines of enquiry, some of which would be very worrying to bondholders, but which may not come to anything. Thirdly, it isn't a good use of resources, which should be focused on getting to the bottom of the companies and their inner workings, not composing, checking, and circulating a stream of updates.

Bondholders need to be patient. At this stage there is nothing they can do to make things better for themselves. The best thing the FCA can do is pursue its investigation without being side-tracked by nervous investors. Pestering the FCA in the way described above may reduce the amount that can ultimately be recovered for all bondholders.

In the event that LCF is eventually shut down and put into Administration, the reporting schedule will be once every 6 months and the recovery could take 2-3 years, so expectations need to be managed.