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FCA and LCF

Dod101
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FCA and LCF

#367268

Postby Dod101 » December 18th, 2020, 9:41 am

I do not now where discussion on regulators should be posted and if this is the wrong place then maybe a mod will move it to a better place.
I have never invested with LCF so have no axe to grind and have only read the summary in the Times this morning but of course read about the problems with London & Capital Finance at the time when things went wrong.

The review was by Dame Elizabeth Gloster and it has found that essentially LCF were using the fact that they were regulated by the FCA as a cover for their other activities which were not regulated to draw in punters to buy mini bonds offering totally unrealistic rates of interest. They then of course used the funds raised for their own ends. Despite many complaints, the FCA did not seem to be particularly interested because they fell outside its remit, in the unregulated sector. Inevitably it all unravelled in January 2019 I think when investors could not get their money back. The sum of £237 million is mentioned.

Guess who was running the FCA at the time? Our now Governor of the Bank of England, Andrew Bailey, and not only that but he made (unsuccessful) representations to Dame Elizabeth not to name individuals in her report, obviously with the intention of avoiding any embarrassment for him. The Times reports that the FCA missed 'multiple red flags' and repeatedly failed to investigate them until late 2018, by which time it was far too late.

She seems to have pulled few punches but of course whether this will make any difference is the question. Expect the FCA to offer protection, at your peril.

Dod

dealtn
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Re: FCA and LCF

#367272

Postby dealtn » December 18th, 2020, 9:47 am

Dod101 wrote:
Expect the FCA to offer protection, at your peril.



Quite. So if it looks too good to be true, it probably is. Don't rely on a regulator, use common sense and avoid.

dspp
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Re: FCA and LCF

#367288

Postby dspp » December 18th, 2020, 10:06 am

Dod101 wrote:I do not now where discussion on regulators should be posted and if this is the wrong place then maybe a mod will move it to a better place.
I have never invested with LCF so have no axe to grind and have only read the summary in the Times this morning but of course read about the problems with London & Capital Finance at the time when things went wrong.

The review was by Dame Elizabeth Gloster and it has found that essentially LCF were using the fact that they were regulated by the FCA as a cover for their other activities which were not regulated to draw in punters to buy mini bonds offering totally unrealistic rates of interest. They then of course used the funds raised for their own ends. Despite many complaints, the FCA did not seem to be particularly interested because they fell outside its remit, in the unregulated sector. Inevitably it all unravelled in January 2019 I think when investors could not get their money back. The sum of £237 million is mentioned.

Guess who was running the FCA at the time? Our now Governor of the Bank of England, Andrew Bailey, and not only that but he made (unsuccessful) representations to Dame Elizabeth not to name individuals in her report, obviously with the intention of avoiding any embarrassment for him. The Times reports that the FCA missed 'multiple red flags' and repeatedly failed to investigate them until late 2018, by which time it was far too late.

She seems to have pulled few punches but of course whether this will make any difference is the question. Expect the FCA to offer protection, at your peril.

Dod


Dod,

There isn't necessarily a 'right' place, though some places are better than others depending on whether it is a generic matter or a specific matter. This board is as good as any at this time, on this topic.

Personally I put my own views on this board but on another thread - see viewtopic.php?f=6&t=20950&p=367285#p367285 . I think you and I are of alike opinion in this matter.

Dame Gloster tells it much the way that many Fools would have done, except that we have been saying these things for 30-odd years now, and the Establishment has curiously and studiously been ignoring us and our ilk. Equitable Life anyone, where the Establishment dinner party circuit got theirs out in advance of the lesser folk .......

This stuff all stinks.

regards, dspp

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Re: FCA and LCF

#367300

Postby scrumpyjack » December 18th, 2020, 10:34 am

Yes these regulators have a very long history of being asleep at the wheel and ignoring impending disasters even though lots of well respected commentators have pointed them out. (eg Equitable Life)

Then when the s**t eventually hits the fan, it is the rest of us who have to pay for it in funding 'compensation', whilst the villains behind it get away scot free. In the US the perpetrators would get 150 years in prison. Here they just get banned from being directors for a few years.

The failed regulators of course get a knighthood.

Dod101
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Re: FCA and LCF

#367319

Postby Dod101 » December 18th, 2020, 11:09 am

Sorry dspp. I did not know of the other thread, but I am pleased to see that Andrew bailey has already been marked out as useless.

Who appoints these people? The Chancellor? Mark Carney was a breath of fresh air in comparison. In the private sector Bailey would have been out on his ear by now.

Dod

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Re: FCA and LCF

#367326

Postby GoSeigen » December 18th, 2020, 11:18 am

All of us on the Banking Board were astounded and dismayed when he was appointed governor of the BoE. How he was chosen I have no idea. Anyone know who his special friend was?


GS

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Re: FCA and LCF

#367541

Postby 88V8 » December 18th, 2020, 8:27 pm

GoSeigen wrote:All of us on the Banking Board were astounded and dismayed when he was appointed governor of the BoE. How he was chosen I have no idea. Anyone know who his special friend was?

Perhaps 'they' wanted someone with a track record of doing nothing.

V8

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Re: FCA and LCF

#367689

Postby XFool » December 19th, 2020, 12:14 pm

Mark Tabor on R4's Money Box today, about the report following collapse of mini-bond company LCF.

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Re: FCA and LCF

#367693

Postby Spet0789 » December 19th, 2020, 12:23 pm

Completely agree on the FCA’s uselessness.

They could improve their entire consumer protection operation by simply googling “high income investment”, “low risk investment” and a few other key phrases on the first day of every month and then for the rest of the month investigating the top 20 hits.

Job done, and probably with 10% of the staff.

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Re: FCA and LCF

#367697

Postby Alaric » December 19th, 2020, 12:35 pm

Spet0789 wrote:They could improve their entire consumer protection operation by simply googling “high income investment”, “low risk investment” and a few other key phrases on the first day of every month and then for the rest of the month investigating the top 20 hits.


Taking a closer look at the investments promoted for and as SIPPs would also be an idea, along with getting HMRC to impose a few more checks on "approval" and the extent to which "Revenue approved" can be used as a marketing device.

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Re: FCA and LCF

#369444

Postby UncleEbenezer » December 24th, 2020, 9:51 am

GoSeigen wrote:All of us on the Banking Board were astounded and dismayed when he was appointed governor of the BoE. How he was chosen I have no idea. Anyone know who his special friend was?


GS

A "compromise" candidate? A yes-man not seen as a threat by (to?) anyone who matters?

For some time ahead of the appointment he was reported by Private Eye - which also pulled no punches about his track record at the Fundamentally Complicit Authority - as "expected" to get the job. Evidently if there was another candidate they got nobbled or vetoed.

I'm not convinced by some of the comparisons in this thread. Harding was political, and the idea that the Private Sector works any better sits uneasily with what we saw around 2007 and in the fallout.

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Re: FCA and LCF

#369549

Postby virtualpalondon » December 24th, 2020, 2:51 pm

The FCA has today responded to the independent reviews of its regulation of London Capital & Finance plc (LCF) and Connaught Income Fund Series 1 and connected companies.
The LCF Review has assessed the FCA’s actions, policies, and approach when regulating LCF between April 2014 and January 2019.

LCF issued non-transferable securities, known as mini-bonds, to 11,625 investors, with a value of over £237 million.
For more details, you need to consult a financial advisor.

Dod101
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Re: FCA and LCF

#369553

Postby Dod101 » December 24th, 2020, 3:03 pm

Sounds like a good day to publish this. Christmas Eve and Brexit plus Covid, and are you saying that it is not even in the public domain?

Dod

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Re: FCA and LCF

#369649

Postby Breelander » December 24th, 2020, 10:26 pm

Dod101 wrote:Sounds like a good day to publish this...


Actually the 'today' in question was the 17th December.

FCA wrote:FCA responds to independent reviews into its regulation of London Capital & Finance and Connaught
Press Releases First published: 17/12/2020 Last updated: 17/12/2020

The FCA has today responded to the independent reviews of its regulation of London Capital & Finance plc (LCF) and Connaught Income Fund Series 1 and connected companies (Connaught).
https://www.fca.org.uk/news/press-relea ... -connaught

Dod101
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Re: FCA and LCF

#369651

Postby Dod101 » December 24th, 2020, 10:33 pm

Thanks Bree. I took the earlier post at face value and I afraid that I did not look further than today and the posts a couple of days back. I will take a good look in the next day or two, ie over the weekend.

Dod


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