London Capital and Finance plc

February 2021 update

Together with the Serious Fraud Office (SFO), we continue to investigate the circumstances surrounding the sale of mini-bonds and ISA bonds by London Capital and Finance (LC&F).

In September 2020, we and the SFO asked LC&F investors to complete a questionnaire by 31 October 2020, to provide us with more information about their LC&F investments, including potential losses. To date we have received over 3,750 completed questionnaires. We will contact you if we require more information or would like you to consider giving a witness statement.

Those who did not complete the questionnaire, but would like to, still can despite the deadline passing, but no submissions will be possible after 31 March 2021.

We would like to thank investors who have taken the time to complete the questionnaire. Your submissions are important to us and will be assessed by the investigation team.

Although we are unable to provide investors with all the information they might want due to the nature of the case and for legal reasons,  we encourage investors to check this page and the SFO’s case page regularly for updates. 

September 2020 Update

Together with the Serious Fraud Office (SFO), we continue to investigate actions relating to the sale of mini-bonds and ISA bonds by London Capital and Finance (LC&F). Due to the nature of the case and for legal reasons, we are unable to provide investors with all the information they might want. But we do ask you to regularly check this page, and the SFO’s case page for updates. 

Giving the FCA and SFO information about investors 

We are now asking all investors, whether they lost money as a result of their investment into LC&F or not, to complete a questionnaire to give us more information about the circumstances of your investment as well as any potential loss.

We understand that many of you have already sent in information to both teams, through a number of channels, but we would be grateful, even if you have sent in information before, if you could complete this questionnaire.  

Information we are asking for 

The questionnaire asks for information about your circumstances at the time you decided to invest in LC&F products, and for details of your investments and losses. There are some detailed questions so please have any documents you need to hand, and set aside 20-30 minutes to complete the questionnaire. 

We will also ask you some questions about your personal circumstances. This is so we can assess if you need any additional support from us. This section is entirely voluntary.

How we will use this information

We will use the information you provide to help both the FCA and SFO investigations. It will also help both agencies to identify any investors we may want to ask for further information.

Question 30 asks if you would be willing to be interviewed and make a statement. If you answer ‘yes’, you may be contacted to provide further information and we might ask you to take part in an interview or to provide a witness statement.

This is something which you can decide later, and we will not assume by completing this questionnaire that you have agreed to do this. 

So that we can consider you as a potential witness we do ask that you complete the questionnaire by 31 October 2020

Your responses will be treated as confidential in line with the General Data Protection Regulation and Data Protection Act 2018. 

What happens next

The information obtained from the questionnaire will help the FCA and SFO investigations into any wrongdoing by those connected to LC&F.

LC&F’s estate will be dealt with by the Administrators, who will assess LC&F’s assets and put forward proposals as to how they will proceed with the administration. The administration is being dealt with by Smith and Williamson. 

How we can help you

The FCA and SFO are committed to victim care. We will continue to update our websites every few months to let you know how this matter is progressing.

In the meantime, please:

  • see our websites for support information for victim support services and organisations that can provide financial advice
  • keep safe any relevant material concerning your investment, as this may be required by the investigation teams
  • be aware that personal data you provide the FCA or SFO in connection with this case will be handled in line with the General Data Protection Regulation and Data Protection Act 2018, and may be shared between investigating agencies for law enforcement purposes

In addition:

  • We do appreciate that there is a support network between fellow investor victims in this case, but please consider the possible dangers of sharing your personal information and experience on public access online platforms. Sharing personal details could present opportunities for fraudsters and put you at risk. For more information go to – Get Safe Online
  • You can find more information on the investigations into LC&F on the  FCA, SFO, FSCS and Smith and Williamson websites.

 

On 30 January 2019, London Capital and Finance plc (LCF) appointed Finbarr O’Connell, Adam Stephens, Henry Shinners and Colin Hardman of Smith and Williamson LLP as joint administrators. These appointments have been made by order of the court. The administrators’ function is generally to act in the interest of the company’s creditors as a whole, and this must be done as quickly and efficiently as is reasonably practicable.

The joint administrators will contact all affected parties in due course, including those borrowers which LCF loaned money to and bond holders. For more information about the administration please:

Visit: https://smithandwilliamson.com/en/services/restructuring-and-recovery-services/london-capital-finance-plc/

Call UK: 0800 046 7006 or International: +44 (0)20 3281 1808

Email: [email protected]

Write:  FAO: The Administrators London Capital & Finance plc (in administration)
                   c/o Smith & Williamson LLP
                   25 Moorgate
                   London
                   EC2R 6AY

April 2020 update

Together with the Serious Fraud Office (SFO), we continue to investigate actions relating to the sale of mini-bonds and ISA bonds by London Capital and Finance (LCF). Due to the nature of the case and for legal reasons, we are unable to provide investors with all the information they might want. We do, however, ask that you regularly check his page and the SFO's case page for updates.

The FCA is investigating multiple lines of enquiry concerning individuals and companies connected to LCF. To date, we have obtained tens of thousands of documents and are undertaking a thorough and forensic review of those. Thousands of hours have been spent on the investigation by FCA enforcement staff since it was opened and we are actively pursuing all reasonable lines of enquiry.

We have a received a lot of information from investors and appreciate the time taken to send us this.  We will use the information investors have provided as part of our evidence review to help us build a more detailed and comprehensive picture of what happened. Where we need to ask further questions, or take witness statements, we will contact investors directly.

Please understand that this is a current criminal investigation and for legal reasons we may not be able to give you as much information as you would like. We appreciate this can be a frustrating and worrying time for investor victims and hope you understand that cases of this complexity do take time to investigate fully.

The FCA and SFO are committed to victim care. We will continue to update our websites every few months to let you know how this matter is progressing.

In the meantime, please:

  • See our websites for support information for victim support services and organisations that can provide financial advice.
  • Keep safe any relevant material concerning your investment, as this may be required by the investigation teams.
  • Be aware that personal data you provide the FCA or SFO in connection with this case will be handled in accordance with the General Data Protection Regulation and Data Protection Act 2018, and may be shared between investigating agencies for law enforcement purposes.

In addition:

  • We do appreciate that there is a support network between fellow investor victims in this case, but please consider the possible dangers of sharing your personal information and experience on public access online platforms. Sharing personal details could present opportunities for fraudsters and put you at risk. For more information go to – Get Safe Online
  • If you have not already done so, please complete the online questionnaires published on the Financial Services Compensation Scheme (FSCS) and the Smith & Williamson websites.
  • You can find more information on the investigations into London Capital and Finance Plc on the  FCA, SFO, FSCS and Smith and Williamson websites.

Who appointed the joint administrators?

The directors of the company received independent advice and determined that the company was insolvent. They then appointed the joint administrators. The FCA consented to the appointment of the joint administrators. 

I am a bond holder, will I get my money back?

The company’s estate will be dealt with by the administrators, who will assess the company’s assets and put forward proposals as to how they will proceed with the administration. The joint administrators will write to you with their proposals for the administration within eight weeks of appointment, this will include the process of how you make a claim.

Do I need to use a third party to get my money back?

If you are approached by a company offering to help you recover your money, you should proceed with caution. For the vast majority of LCF’s bond holders, there will be no benefit in involving a third party in making a claim. If you have any questions about the administration process, please contact the joint administrators using the contact details above.

Being Alert to Scams 

All customers should remain alert to the possibility of fraud. If you are cold called or messaged by someone claiming to be from LCF Smith & Williamson or the FSCS please end the call and call them back using the number above.

What is a mini-bond?

There is no legal definition of a ‘mini-bond’, but the term usually refers to illiquid debt securities marketed to retail investors.

A mini-bond is essentially an IOU issued by a company (the issuer) to an investor, in exchange for a fixed rate of interest over a set investment term. At the end of the term the investors’ capital is due to be repaid.

The return on investors’ money entirely depends on the success and proper running of the issuer’s business. If the business fails, investors may get nothing back.

What concerns led to the FCA to take action against LCF?

London Capital & Finance PLC (LCF) was the issuer of mini-bonds which it stated it used to make loans to corporate borrowers to provide capital for further investment. The FCA believes there are approximately 14,000 customers invested in its bonds.

Issuing mini-bonds is not normally a regulated activity so firms issuing mini-bonds do not usually need to be authorised by the FCA. However, when an authorised firm approves a promotion for mini-bonds, they must ensure that it is in line with FCA rules that the financial promotion is fair, clear and not misleading. This means, for example, that risks are appropriately communicated.

On 10 December 2018 the FCA directed LCF to immediately withdraw its promotional material on the basis that the way in which it was marketing it bonds was misleading, not fair and unclear. The FCA’s concerns included the fact that LCF bonds were being marketed as ISA eligible when they were not – for further details see the FCA’s Second Supervisory Notice dated 17 January 2019. The FCA immediately commenced an investigation into the firm’s promotions.

In order to further protect investors, and because the FCA had serious concerns about the way the firm was conducting its business, on 13 December 2018 the FCA imposed certain requirements on LCF including (a) not to dispose of or deal with its assets, save in limited circumstances (b) to cease conducting all regulated activity and (c) not to communicate any financial promotions. These requirements were imposed pursuant to a voluntary application by LCF.

Did LCF need to be authorised?

Firms are required to be authorised by the FCA if they undertake any of the regulated activities listed in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the Order). Authorised firms are subject to a set of overarching principles and rules issued by the FCA. These principles and rules have to be followed when an authorised firm is carrying on regulated activities in the UK. The Order excludes certain activities from its scope.

Issuing mini-bonds does not normally involve the carrying on of a regulated activity. Therefore, LCF did not need to be authorised to issue the mini bonds but did need to be authorised to issue the promotion of the mini bonds.

Will investors be able to get compensation from the Financial Services Compensation Scheme?

For the latest position for LCF investors, please go to the FSCS website.

Will investors have a tax liability as the products are not ISA eligible?

On the 19 March 2019 HMRC contacted bondholders to inform them that they had decided that the Innovative Finance ISAs offered to investors by LCF did not comply with the requirements of the ISA regulations. The mini-bonds offered by LCF were not qualifying ISA investments because they were not a transferable security.

ISA account holders can contact HMRC by email at [email protected] with any questions relating to their LCF ISAs.

Independent Investigation

On 1 April 2019 the FCA announced that the Board had taken a decision that there should be an investigation by an independent person into the issues raised by the failure of London Capital & Finance (LC&F). The investigation should cover questions in two areas:

  • whether the existing regulatory system adequately protects retail purchasers of mini-bonds from unacceptable levels of harm
  • the FCA’s supervision of LC&F

On 2 April 2019 Charles Randell, FCA Chair wrote to the Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee to provide further details on the Board’s decision.

Serious Fraud Office

On 18 March 2019, the Serious Fraud Office announced that they had commenced an investigation in to various individuals associated with LCF. The investigation was opened as a result of the FCA referring the matter to the National Economic Crime Centre (NECC) which is based at the National Crime Agency’s London HQ and includes officers from the Financial Conduct Authority, the NCA, HM Revenue and Customs, the City of London Police, the Serious Fraud Office, the Crown Prosecution Service and the Home Office. The FCA’s investigation into these matters will proceed jointly with the SFO’s.

Page updates

26/02/2021: Information added February 2021 update
18/09/2020: Link changed Broken link fixed
17/09/2020: Information added September 2020 Update
13/08/2020: Link changed

05/11/2019: Link added Independent investigation website