Nicky Morgan calls for investigation into possible regulatory failings in collapse of lender London Capital & Finance
The chair of the Treasury Committee Nicky Morgan MP has called for an investigation into whether there were regulatory failings surrounding the collapse of lender London Capital & Finance (LC&F) which went into administration in December.
Morgan has written to the board of the Financial Conduct Authority (FCA) to ask it to consider whether the tests around the need for a statutory investigations into possible regulatory failings have been met.
Morgan has also written to John Glen MP, economic secretary, to ask the treasury to use its powers to compel the FCA to require such an investigation if the FCA declines to do so.
Read more: Fraud office launches investigation into London Capital & Finance
Yesterday the Serious Fraud Office (SFO) revealed it had made four arrests in its investigation into events surrounding the lender’s collapse.
Morgan said: “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.”
LC&F collapsed in December after the FCA told it to withdraw its marketing material which it said was “misleading, not fair and unclear”.
LC&F offered investors mini-bonds, marketing them as a "fixed rate ISA" to customers, many of them first time investors.
Read more: Investors fear £236m given to London Capital & Finance is lost
Today London Oil & Gas, which received much of its finance from LC&F, also went into administration.
Smith & Williamson, which is also handling LC&F’s administration, was appointed as administrator.
London Oil & Gas’s key investments are convertible loan notes and warrants in Aim-listed oil company Independent Oil & Gas and Faroese oil company Atlantic Petroleum.
The administrator said it did not expect either company to be adversely affected by the administration.
An FCA spokesperson said: “We have received the letter and will respond.”