London Capital & Finance: £236m firm collapses
Posted: March 9th, 2019, 9:01 am
A lesson for everyone in the 'if it looks too good to be true' category.....
Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed. London Capital & Finance (LCF), now in administration, took £236m following a marketing campaign that is now under investigation for mis-selling.
LCF paid an agent, Brighton-based Surge PLC, 25% commission - which amounted to £60m - to run the marketing campaign. A series of web adverts promising 8% returns from secure ISAs were released and in addition a comparison website - run by a company with links to Surge - would compare the 1% and 2% return ISAs from high street banks with the investments at LCF.
LCF was authorised by regulator the Financial Conduct Authority (FCA) - but the FCA said the authorisation was to provide consumer financial advice, not the sale of bonds or ISAs.
Where did the money go?
In a letter to bondholders administrator Finbarr O'Connell said once the £60m to Surge was paid, returns of up to 44% would be required in order for LCF to make good on its promises.
Investors were told the funds - and therefore risk - would be spread across hundreds of companies but, according to Companies House records, LCF loaned money to 12 - four of which have never filed accounts, nine are fewer than three years old, and nine had loans from LCF in 2017.
Much of the cash was loaned to companies that then "sub loaned" to others. Bondholders have raised concerns about connections between the directors of companies that received money and those who ran LCF.
https://www.bbc.co.uk/news/uk-england-47454328
The Financial Conduct Authority really ought to be doing better with situations like this....
Cheers,
Itsallaguess
Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed. London Capital & Finance (LCF), now in administration, took £236m following a marketing campaign that is now under investigation for mis-selling.
LCF paid an agent, Brighton-based Surge PLC, 25% commission - which amounted to £60m - to run the marketing campaign. A series of web adverts promising 8% returns from secure ISAs were released and in addition a comparison website - run by a company with links to Surge - would compare the 1% and 2% return ISAs from high street banks with the investments at LCF.
LCF was authorised by regulator the Financial Conduct Authority (FCA) - but the FCA said the authorisation was to provide consumer financial advice, not the sale of bonds or ISAs.
Where did the money go?
In a letter to bondholders administrator Finbarr O'Connell said once the £60m to Surge was paid, returns of up to 44% would be required in order for LCF to make good on its promises.
Investors were told the funds - and therefore risk - would be spread across hundreds of companies but, according to Companies House records, LCF loaned money to 12 - four of which have never filed accounts, nine are fewer than three years old, and nine had loans from LCF in 2017.
Much of the cash was loaned to companies that then "sub loaned" to others. Bondholders have raised concerns about connections between the directors of companies that received money and those who ran LCF.
https://www.bbc.co.uk/news/uk-england-47454328
The Financial Conduct Authority really ought to be doing better with situations like this....
Cheers,
Itsallaguess