The U.K. Financial Regulators’ Complaints Commissioner has published its final report upholding complaints from over 400 complainants concerning: (i) the U.K. Financial Conduct Authority’s failures of regulation concerning London Capital & Finance; and (ii) the FCA’s subsequent refusal to compensate bondholders for its role in their losses.
LCF, an alleged Ponzi scheme currently under investigation by the U.K. Serious Fraud Office, went into administration in January 2019 causing losses to investors of over £200m. LCF had obtained FCA authorization in 2016 and leveraged the “halo effect” that this created to encourage over 11,000 mostly retail investors to invest in its bonds. It was registered as an ISA manager and sold its products as ISAs via advertising on major search engines and price comparison websites. The majority of investors’ funds were then dissipated; LCF’s administrators currently anticipate a recovery of just 25%….