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Long-awaited London Capital & Finance report delayed

Service Area: Criminal and Regulatory

Member: Roger Isaacs

The report into the regulation of London Capital & Finance (LCF) is set to be delayed once again.

The much-anticipated findings from the investigation into the circumstances surrounding LCF’s collapse and the Financial Conduct Authority’s (FCA) supervision of LCF were initially pushed back to 30 September 2020 but are now more likely to be released in November.

Investors were promised returns of up to eight per cent by LCF before the company was put into formal administration by the FCA for ‘misleading and unfair marketing’.

LCF sold investors mini-bonds and promised them that their money would be invested in low-risk loans to small firms. However, when it collapsed last year, it owed savers £237 million.

Separately, the High Court has recently given leave for four of LCF’s directors to be sued. The case involves the transfer of £32.6 million into the accounts of the four men and has been brought by the administrators of a separate firm, London Oil & Gas, which collapsed shortly after LCF.

This firm was one of the companies that borrowed around £91 million of investors’ money from LCF and lent £32.6 million of it to a further business, called London Group.

It is alleged that London Group passed these funds on to the four directors. The administrators of London Oil & Gas found that almost all the businesses that had received loans from LCF were linked to the four men.

To date, the UK Financial Services Compensation Scheme (FSCS) has issued 844 decisions on what LCF customers are owed and has paid out more than £13.5 million in compensation.

Roger Isaacs, Forensic Partner at Milsted Langdon, has spoken in length about the case of LCF and even shared his expertise with BBC Radio 4’s Money Box programme.

He said: “The High Court’s judgment opens up another avenue for a potential recovery for investors but each time money is moved from one entity to another, the prospect of recovery tends to become more remote.  Similarly the cost of following the money typically increases as the trail becomes longer.

“In such complex and convoluted cases, it is all too often the case that at the end of the investigation, little is left for those who have lost the most and deserve compensation.”

Author: Roger Isaacs

9 September 2020