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Nicky Morgan asks FCA to investigate events at London Capital and Finance

19 March 2019

London Capital and Finance (LC&F) went into administration in January 2019. This followed concerns raised by the Financial Conduct Authority (FCA) in December 2018.

The FCA directed LC&F in December to withdraw its promotional material for its mini bonds on the basis that the marketing was “misleading, not fair and unclear.”

Whilst the promotional material is regulated by the FCA, the product itself—mini-bonds—are unregulated.

Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, has today written to the FCA Board to request that it consider whether the tests around the need for a statutory investigation into possible regulatory failure surrounding LC&F have been met.

HM Treasury has the power to require the regulator to conduct such an investigation. Mrs Morgan has also written to John Glen MP, Economic Secretary, to urge the Treasury to use this power if the FCA declines to investigate.

Chair's comments

Commenting on the correspondence, Mrs Morgan said:

“The FCA is currently investigating LC&F's marketing material and the SFO is investigating individuals associated with the company.

“Yet there is a broader need to understand what can be learned in a regulatory sense from the events at LC&F.

“I have therefore requested that the FCA Board consider whether the failure of LC&F, the potential harm to those consumers involved, and the regulatory system that led us here, warrants a statutory investigation.

“If the FCA decline, I have asked HM Treasury to consider using its power to require the regulator to conduct such an investigation.

“Even if the regulator does not conduct an investigation, the FCA Board should set out whether firms are using their FCA-authorisation in a way that may be misleading to consumers, whether consumers need greater clarity on what such an authorisation does to protect them, and whether mini bonds should now be regulated.

“The stories of those affected by the actions of LC&F are distressing. The Government and the regulator must do all they can to prevent history from repeating itself.”

Further information

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