H&H has previously reported on the Financial Conduct Authority investigation into London Capital & Finance, a major event backer. We find out the latest, as some compensation is paid out
INVESTIGATIONS continue into the “complicated web of financial inter-relationships” for a former major eventing backer, as the first individuals whose money was tied up in the multi-million-pound case receive compensation.
Administrators for London Capital and Finance (LCF) have told investors they expect to reclaim a minimum of 25% of the £237m invested by bondholders.
LCF sponsored a number of horse trials, and its connections spread further through the equestrian world, including multi-million-pound loans to rider and businessman Spencer Golding and companies in which he was involved.
H&H reported in 2019 that LCF’s assets had been frozen as part of a Financial Conduct Authority (FCA) investigation (news, 31 January and 1 August 2019). This was centred around mini-bonds, which were issued to some 11,600 investors and advertised with returns as high as 8%, and the FCA had concerns about the way these were marketed.
LCF went into administration, and Smith & Williamson has since been investigating its affairs.
Smith & Williamson’s latest progress report, published 26 August, stated: “Whilst the detail of our investigation work has been and remains highly confidential, we can say that significant progress has been made pursuant to which we are proposing to give bondholders and creditors a focused update in the course of the next few weeks.”
The administrators have been working to understand the complex network of the companies to which loans were made from LCF, some of which had connections with or were also controlled by individuals associated with LCF.
“This is a very important judgement and another step along the way for the administrators of LOG and LCF to uncover the true position with regard to the complicated web of financial inter-relationships between a number of connected entities and parties,” said the update from Smith & Williamson.
The latest statement from the FCA, released this month, said the organisation and the Serious Fraud Office are continuing to investigate actions relating to the sale of mini-bonds and ISA bonds by LCF.
The FCA is now asking all investors “whether they lost money as a result of their investment or not” to complete a questionnaire to give investigators more information about the circumstances of their investment and any potential loss.
In June, the Financial Services Compensation Scheme (FSCS) started paying compensation to customers who received misleading advice from LCF and as of 27 August, it had issued 1,295 decisions and paid out just over £20m in compensation.
“While we still have a lot of claims to review, we want to reassure LCF customers that this remains a high priority for us and we’re working to pay customers as quickly as possible,” said an FSCS statement.
“One of the things we’re doing to help speed up this process is increasing the size of the specialist team we set up to review LCF claims by nearly 80%. Because of the amount of data we need to review, we do not expect to complete this process before the end of December.”
The FSCS is also undergoing a judicial review over its approach to LCF and the FSCS’s decision not to pay compensation to bondholders who invested on or after 3 January 2018.
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