Emboldened LCF investors secure crowd funding for FSCS legal challenge

London Capital & Finance logo

After being denied compensation from the Financial Services Compensation Scheme (other than a tiny handful of exceptions,) London Capital & Finance investors have raised money via crowdfunding to launch a judicial review.

As at 23rd April the campaign had already raised £7,833, exceeding its initial £7,000 target. Technically the campaign is to fund the judicial challenges of only the four LCF investors on the creditors' committee, but if their challenges succeed, this will set a precedent for the rest.

London Capital & Finance investors have been both emboldened and enraged by the FSCS' early indications that it will bail out investors in fellow collapsed minibond scheme Basset & Gold, which went into administration on 1 April.

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FCA knew about misselling of Blackmore Bonds three years before collapse

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The collapse of Blackmore Bonds has once again laid bare the Financial Conduct Authority's institutional contempt for its objective of consumer protection.

Paul Carlier, an independent consultant most well known for blowing the whistle on dodgy FX dealings at Lloyds, contacted the FCA on March 2017 to warn them that Blackmore Bonds' high-risk investments were being missold by an unregulated introducer named Amyma.

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Were Basset & Gold bonds risk-free after all?

A couple of weeks ago West Ham sponsor Basset & Gold (reviewed here in December 2017) collapsed into administration.

So far so normal. Unregulated high risk investment fails, news at 11.

What was unusual about Basset & Gold is that back in 2018 at least, they were promoting their bonds while explicitly holding out that investors might be compensated by the FSCS if things went sour – on the basis of misselling.

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FSCS announces compensation for only 159 London Capital and Finance bondholders

London Capital & Finance logo

The hopes of most victims of FCA-authorised Ponzi scheme London Capital & Finance were dashed last week when the FSCS announced it would not compensate them on the basis of having received misleading advice.

It said that investors had merely been given incorrect information, which doesn't generate a liability that is covered by the FSCS' "protected business" rules.

That the FSCS has eventually taken this decision is disappointing for investors but ultimately not surprising. London Capital Finance was not authorised to give advice to retail investors, employed no qualified financial advisers, and its call centre staff were generally trained to avoid crossing the line from information to advice - as in any other non-advisory finance company. (Although some went off-piste and crossed the line into the "I'd tell my own mother to invest in this" school of advice.)

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FCA chief Andrew Bailey kicked upstairs

With the triumphant swagger of a county athlete who sees that he's the 1-10 favourite for tomorrow's race, drinks five pints of scrumpy in the pub the night before, and eventually staggers over the line an inch ahead of a 12-year-old farmer's son before vomiting into the trophy, FCA CEO Andrew Bailey has shrugged off the ongoing scandal of the FCA's failure to deal with unregulated investments and secured the appointment of Governor of the Bank of England.

Bailey must have been sweating a little as a succession of headlines about financial scandals old and new (minibonds, mortgage prisoners, vulture "restructuring" divisions) - with the FCA's conscious inaction as a constant theme - rolled through the presses as the Government deliberated its decision. But in the end, Bailey's "safe pair of hands" reputation won the day.

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Bond Review is 2 today

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Today marks the second anniversary of Bond Review’s first ever article, our review of the now sadly notorious London Capital & Finance.

So far Bond Review’s two years have seen:

  • 90 reviews of high-risk unregulated investments promoted to the public
  • 190 further articles bringing you news on the progress of these investments (or lack of it)
  • 8 attempts at legal intimidation
  • Plus a further 2 attempts to remove Bond Review from Google search results by making defamation claims to Google (without making any attempt to contact us directly)
  • 0 court proceedings started
  • 1 fake DMCA takedown
  • 2 offers to buy the domain (and all its content) for an aggregate of £10,000 (to host a site reviewing James Bond films? sure guys)
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