Industry watchdog the Financial Conduct Authority’s (FCA) is itself to be investigated over its supervision of London Capital & Finance (LC&F) and the circumstances surrounding its collapse.


The Treasury has announced that in addition to a full enquiry into the doomed mini-bond issuer, there will also be a wider policy review, including a review of the regulatory regime for mini-bonds and other non-transferrable securities.

The investigation will be led by Dame Elizabeth Gloster, who was the first female judge of the Commercial Court and a judge of the Court of Appeal; she will examine how the FCA exercised its powers and whether it fulfilled its statutory objectives.

‘so customers are properly protected and the UK’s financial system can continue to be one of the safest in the world’

It’s report will be to City minister John Glen, who in announcing the investigation said: ‘We urgently need to get to the bottom of the circumstances around the collapse of LC&F. ‘Dame Elizabeth will bring her vast experience and rigour to this important investigation, which will help ensure this type of thing doesn’t happen again.

‘The Treasury will also be looking at how the current regime for these investments works, so customers are properly protected and the UK’s financial system can continue to be one of the safest in the world.’

FCA chair Charles Randell wrote to Glen in March saying that there should be an independent probe into the collapse of LC&F and a wider sector review: ‘This investigation will establish what happened with LC&F and whether further changes are required,’ he said.

‘It will support the broader review of mini-bond regulation.  Dame Elizabeth Gloster brings independence and extensive experience to the task, and the FCA will ensure that she has all the access and support she needs to conclude her work as quickly as possible.’

LC&F went into administration in January after the regulator ordered it to halt its regulated activity and stop marketing products; FCA estimates 14,000 people had invested £214m through the bonds, and is working with the Financial Services Compensation Scheme (FSCS) to assess whether investors can claim compensation from the firm.


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