Independent investigation into London Capital & Finance

Read the report of the independent investigation into the events relating to the FCA’s regulation of London Capital & Finance (LCF) following the firm’s failure. We set out the background to the investigation and publish our response to the review’s recommendations.

The Gloster Review

The Independent Reviewer, Dame Elizabeth Gloster, was approved by HM Treasury to investigate the circumstances surrounding the collapse of LCF. HM Treasury published her report on 17 December 2020, assessing the FCA’s actions, policies and approach when regulating LCF between April 2014 and January 2019.

FCA response

In our response, published on 17 December 2020, we explain we have accepted the review’s 9 recommendations for us. We set out what we have done and what we will do next to implement fully the review’s recommendations.

Background to the LCF review

On 30 January 2019, LCF entered administration following FCA action in December 2018 directing LCF to immediately withdraw its promotional material. This was on the basis that the way the firm was marketing its retail investment products (often referred to as ‘mini-bonds’) was misleading, not fair and unclear.

LCF issued mini-bonds to 11,625 investors, with a value of £237,207,497. 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 required to be appropriately communicated.

On 23 May 2019, following a request from the FCA’s Board, the Economic Secretary to the Treasury directed the FCA to carry out an independent investigation into the circumstances surrounding the collapse of LCF. A Protocol setting out the approach to the conduct of the investigation, led by Dame Elizabeth Gloster, and underlining the nature of the review was published on 25 July 2019.

Alongside this, the Treasury announced it would review the wider policy questions raised by the case of LCF. These relate to the regulatory and tax treatment of the kinds of retail investment products issued by LCF (often referred to as ’mini-bonds’).

Dame Elizabeth Gloster’s biography

Dame Elizabeth has had a distinguished career as a barrister and as a judge on the High Court and the Court of Appeal. As well as her current work as an international arbitrator, she has deep experience in commercial law and brought expertise in financial services, insolvencies and regulation to this role.

Next steps

We accept and will implement each of the 9 recommendations made to the FCA in the LCF Review. The LCF Review has also made 4 additional recommendations for the Treasury and wider Government and we will provide them with any advice and support they need as they consider these.

The FCA Board – and its Audit and Risk Committees – will oversee the implementation of the recommendations of this and the Connaught Review (led by Mr Raj Parker). We have issued an update alongside our annual report.

We will update this website with the progress of our continuing transformation programme.

PA Consulting report

The final report of the Independent Review into the FCA’s regulation of London Capital and Finance makes reference to a report produced by PA Consulting for the FCA in 2016. Read the PA Consulting report


We recognise that this is an uncertain time for bondholders. We will determine complaints against the FCA arising from LCF as quickly as we can. In line with our Complaints Scheme, we will consider all complaints on an individual basis.

Page updates

15/07/2021: Publication added
15/07/2021: Publication added Implementing the recommendations from the Independent Reviews - update.
14/07/2021: Link added 2 previously published letters added to the Useful resources section

05/11/2019: Link added Independent investigation website