Thousands of investors are worried they have lost everything after investing into a high-risk bond scheme marketed as a “Fixed Rate ISA”.
London Capital & Finance (LCF) has been placed into administration after the Financial Conduct Authority has found it making “communications in relation to its fixed rate ISA which were misleading, not fair and not clear”.
The communication in question relates to a marketing campaign carried out by Brighton-based Surge PLC, a firm that LCF had hired.
LCF ended up taking £236m from investors after the marketing campaign, which involved a series of online adverts promising 8% returns from secure ISAs. It is also included a comparison website – run by a company with links to Surge PLC – which would compare the 1% and 2% returns ISAs from high street banks with the investments from LCF.
Many of those affected were first-time investors, individuals who have received inheritance, small business owners, or newly retired.
Administrators have warned that investors could get as little as 20% of their money back.
How were London & Capital allowed to do this?
LCF was authorised by the Financial Conduct Authority (FCA), however the FCA has stated this was in relation to providing consumer advice, not the sale of bonds or ISAs.
The FCA subsequently ordered the advertisements to stop running, and in December froze LCF’s activities.
By this point, however, it was too late. Surge PLC were hired on 25% commission, meaning they were owed £60m for the marketing campaign. In a letter to bondholders, administrator Finbarr O’Connell said once this fee was paid, returns of an unreachable 44% were required for LCF to make good on its promises.
What were investors told?
Not only were investors told they would receive 8% returns on their “secure” ISA, they were also informed that their funds – and therefore their risk – would be spread across hundreds of companies. However, according to Companies House, LCF loaned money to just 12 companies:
- Four of these companies had never filed accounts
- Nine of these companies were fewer than three years old
- Nine of these companies had loans from LCF in 2017
Many of the companies also “sub loaned” investors cash to other companies. In addition to this, the owner of LCF, Andy Thomson, was a shareholder in one of its client companies until shortly before the loan was agreed. All of which makes interesting reading for the FCA.
Who has been affected?
The BBC interviewed Christine Anderson, a business owner in Devon who had put thousands of pounds into LCF. She said of the matter:
They have done very well out of hard-working people – a lot have put some or all of their savings into this company.
The directors and ex-directors are living the life of Riley from what I can see, with their helicopters, their horses, their properties.
It is very sad that this could have been allowed to happen.
Peter Thornley, also of Devon, retired after a long teaching career. He is now afraid he may have to return to work if their money is lost.
It put us under a lot of pressure – socially and emotionally.
We have all got money that we have been left by parents or lump we got on retirement, then all of a sudden 35 years of savings has gone in a couple of months.
What next for those affected by London & Capital Finance collapse?
We are still learning details about this case, and our team of expert mis-sold investment solicitors can help you potentially recover some of your lost savings should you have been affected.
At Smooth Commercial Law, our team of solicitors have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing an increase in claims for mis-sold pensions, and have managed to secure compensation for many of our clients.
Should you have a claim, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.