Is it time for a “ScamSmart” leaflet for first-time investors?

With the taxpayer still reeling from the £170m+ bill that has fallen on them from the London Capital and Finance scandal, is it time to start issuing a "ScamSmart" leaflet to first-time investors who've just come into large lump sums?

During the last wave of "pension liberation" scams in the early 2010s, hundreds of millions of pounds were lost by investors who transferred their pensions to fraudsters who promised fabulous returns and "loopholes" that would allow the investor to release their money earlier and in larger quantities than the rules allowed.

Although pension fraud remains rife, the scale of the problem was dampened by in a number of ways:

Continue reading...

When will the Government put LCF investors and levy-payers out of their misery?

London Capital & Finance logo

The interminable saga of London Capital and Finance returned to the newspapers this week when John Glen, secretary to the Treasury, provided an update to the Sunday Telegraph on the announcement that the Treasury would set up an ad-hoc compensation scheme to compensate LCF investors who have so far missed out.

The update, three months after the compensation scheme was announced at the cig-end of 2020, is that there is no update at all.

Continue reading...

LCF to cost legitimate finance industry and general public nearly £200 million?

London Capital & Finance logo

Figures published by Money Marketing last week indicate that so far the FSCS has paid out £56.3 million to 2,878 investors in FCA-authorised Ponzi scheme London Capital and Finance.

At around £19,500 per investor, that's pretty typical of the average total investment.

Apart from £2.7m for investors who transferred a stocks and shares ISA, the vast majority of that was paid for LCF giving misleading "advice". Despite not being a financial advice firm, not being authorised to give financial advice, and employing no financial advisers, Financial Services Compensation Scheme levy payers, i.e. the general public, have been put on the hook on the basis of "I'd advise my own mother to invest in this" school of salesmanship.

Continue reading...

Bailey-Gloster LCF spat distracts from real issue

London Capital & Finance logo

An unedifying dispute broke out this week as Andrew Bailey testified to a Treasury Select Committee about the collapse of London Capital and Finance.

In one of the more depressing sections of Dame Gloster's report into the FCA's mishandling of the FCA-authorised Ponzi scheme (in a crowded field), Dame Gloster highlighted how, instead of using the investigation as an opportunity to learn from its mistakes, the FCA instead tried to shirk responsibility, claiming that holding individuals responsible for their failings might deter people from applying to be senior bureaucrats, and questioning whether, in a very real sense, there was any such thing as responsibility at all.

Continue reading...

FCA did betray investors and surrender to OneCoin Ponzi scheme, BBC podcast reveals

Last November, following up on a Private Eye story, I asked whether the FCA had withdrawn a "scam warning" against the international billion-dollar Ponzi scheme OneCoin, after threats from notorious libel lawyers Carter-Fuck (more vulgarly known as Carter-Ruck).

As a refresher, OneCoin took in £4 billion from investors in exchange for "OneCoins", its made-up cryptocurrency. OneCoins were given an imaginary and ever-increasing value, which investors could cash out to a very limited degree via an exchange. These withdrawals were funded by new investors' money, in the classic Ponzi scheme fashion.

Continue reading...

Treasury proposes raising hoop for unregulated investments to jump through

On 20 July the Treasury proposed a tweak to the rules surrounding promotion of minibonds and other high-risk unregulated investments sold to the public.

Currently, any firm which is authorised by the FCA, no matter how obscure, can approve a financial promotion for an investment security, giving the investment the green light to be sold to the public.

It would not be fair to say that to be able to flog an unregulated investment security to the public, you need to cut out two tokens from a packet of breakfast cereal and send it to the FCA. What you need to do is hire someone else who at some point has sent in their tokens, and get them to approve your adverts.

Continue reading...

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.

Continue reading...