FCA responds to 98% of London Capital & Finance complainants
The UK Treasury Committee today published responses from the Treasury and the Financial Conduct Authority (FCA) to its Report on the Financial Conduct Authority’s Regulation of London Capital & Finance plc (LCF).
In December 2018, the FCA directed LCF to withdraw promotional material for its ‘mini-bonds’, on the basis that they were “misleading, not fair and unclear”.
The following month, LCF entered administration. Following a request from the previous Committee, the Treasury agreed to a request for an independent investigation into the collapse of LCF.
Rt Hon. Dame Elizabeth Gloster DBE was appointed to lead the investigation, the findings of which were published in December 2020. The Treasury Committee launched its inquiry into the FCA’s regulation of LCF in February 2021 in order to consider Dame Elizabeth’s findings, examine the changes that have been made since the publication of her report, and to make further recommendations to the FCA and HM Treasury.
The Committee’s report slammed the FCA over deficiencies in the regulation of LCF. The Committee said it supports the views of the current FCA leadership that the organisation needs to become a more “proactive”, “agile”, “decisive”, and joined-up regulator that is willing to act to protect consumers and financial markets.
In its response, the FCA promised an update on the matter would be issued shortly. In the meantime, the regulator said that all LCF complaints are being considered individually. As at 23 August 2021, the FCA had responded to 98% of the 1,106 complainants.
The regulator says it will continue to coordinate with the Treasury on its communications with bondholders. The administrators also play an important role and will need to work closely with the FSCS given the Government’s plans for FSCS to administer the LCF Compensation Scheme; this will help to ensure a coordinated approach for LCF bondholders.
The FCA, along with the PRA, intend to conclude the Complaints Scheme Consultation by the end of the year, and will take into account the views of the Committee and other interested parties.