City watchdog calls for review of its regulation of collapsed mini-bond firm London Capital & Finance
The Financial Conduct Authority (FCA) said today there should be an independent investigation into its regulation of mini-bond firm London Capital & Finance (LC&F).
The company collapsed in January owing investors more than £230m.
The watchdog also called for an investigation to look at whether the existing regulatory system adequately protects retail purchasers of mini-bonds from unacceptable levels of harm.
The FCA’s board decided that the FCA should ask the Treasury to use its formal powers to direct the FCA to commission this review to ensure it has a broad and comprehensive remit.
It follows a demand from chair of the Treasury Committee Nicky Morgan MP for an investigation into the FCA’s regulation of LC&F.
Morgan said: “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.”
LC&F collapsed in December after the FCA told it to withdraw its marketing material which it said was “misleading, not fair and unclear”.
It offered investors mini-bonds, marketing them as a "fixed rate ISA" to customers, many of them first time investors.
Both the FCA and Serious Fraud Office are investigating the collapse and four arrests have been made.