Thoughts on Finance, Current Affairs and General Consumer Ripoffs - Damn Lies and Statistics

You'd expect that in the 21st Century as we become more knowledgeable with much better access to information and scientific advances that we would avoid obvious failures with regulations being ignored but again this week it's clear that isn't happening. 21st Century Regulation Failures Any followers of this blog will be well aware that the London Capital & Finance failure shows the complete lack of effective regulation by the Financial Conduct Authority in the UK to protect savers from losing money to investment scams. To have nearly £250 million of savers money invested in an unregulated investment company that could claim to be regulated and market their products as safe ISAs when the money was being systematically siphoned from the company is an appalling reflection on the state of our financial regulations. It appears that it isn't just the FCA that is at fault but that the auditors of the company also failed to highlight that LCF was technically insolven

Another ISA product being promoted by the website that previously plugged the LCF ISAs and bonds is called Grounds Investments. This is an IF ISA so your money is at risk. It is not a cash ISA and is one where you could lose your entire investment should the company fail. It's generally a good idea to make sure that the company you are giving your money to is secure and has a good track record. Grounds Investments ISA Review According to their website Grounds Investments is the UK arm of a German residential property company and they claim to have been operating for 12 years. However the key part is not how long the German company is trading but the history of the UK company Grounds Investment PLC that you will be handing your money to. If you check out the details for Grounds Investments PLC you will see that they have not even been in existence for a year, they were only registered on 14 February 2019. Grounds Investments PLC history If you are looking for a h

According to today's FT, LCF were insolvent as far back as 2017. The FT used an accountant to analyse the published accounts which suggests that LCF had negative assets of almost £10 million in 2017. According to the quote in the FT: “LCF was effectively insolvent almost from the beginning,” said Tim Bush, head of governance and financial analysis at the shareholder advisory group Pirc.  It begs the question of how two major accountancy firms could sign off their accounts as auditors when the picture was so misleading. Could there be a way for investors to claim against them for their lack of warning of the state of the company? https://www.google.com/url?rct=j&sa=t&url=https://www.ft.com/content/09df4f72-5222-11e9-9c76-bf4a0ce37d49&ct=ga&cd=CAEYACoUMTQyODE3NjU4NzU3MjQ0MzI1MzEyGjdlMWYzMmUxZDI0OGNkMzE6Y29tOmVuOlVT&usg=AFQjCNHCLOGcwRKsqVtWcG6Uybvg5siXhg

  The Capital Bridge is the latest company to be promoted via Top ISA Rates website that plugged London Capital & Finance bonds providing most of their investors. It seems to follow a very similar model to LCF and Blackmore Bonds with 20% of your investment being used to pay their fees. Despite the Capital Bridge website saying that 20% of your investment is being paid as commission and costs then they very misleadingly state that "there are no setup fees or management fees". What is the 20% removed from your initial investment if it's not a setup or management fee? This section on fees has absolutely no mention of the fact that only 80% of your money is actually invested. It's almost as if the sections of the website were produced by completely different people so maybe the 20% warning was added much later and they forgot to add it elsewhere. The Capital Bridge ISA bond review - Is it Genuine? Remember this is an unregulated high risk mini bond w

It was clear on the LCF website that they were not protected by the FSCS so can claim for your lost investment? LCF were regulated by the Financial Conduct Authority (FCA) for the loans that they made but the mini bonds that they issued were unregulated and not covered by FSCS. London Capital Finance FSCS Claims Their adverts did have the words "capital at risk" but it was not made clear what this meant and adverts from Surge Financial using websites like Top ISA Rates did not mention this. London Capital Finance - How to access FSCS Claims The report from Smith & Williamson indicates two possible ways that investors in LCF may be able to get compensation from FSCS. 1) If they were given "Negligent advice". Many people seem to consider that they were advised by LCF staff to invest in the LCF bonds or ISA products. However the definition of advice is very specific. I believe that the reason S&W have mentioned advice is that some LCF invest

Where are the People and assets behind LCF & their agent Surge Financial? London Capital & Finance owned a helicopter purchased by Andy Thomson. LCF helicopter seized This has now been seized and is being held at Shoreham Airport in Sussex. According to the administrators one of the loans of £12 million was to a stables called Home Farm originally run by Spencer Golding but now owned by Sean Cubitt who was unable to provide any paperwork for the purchase of the company or for any of the horses. There were originally 85 horses apparently with a combined values of £15 million according to the owners but when the administrators visited they could only see 35 that had a value of less than £10,000 each. Sean Cubitt claimed that there was no bank account for the company that runs Home Farm. So a company with no bank account was loaned £12 million by LCF. Yet another example of the lies they told to investors about their lending process. We understand that the val

Smith & Williamson have released their proposals for the administration of London Capital and Finance. There are a few key takeaways that I've seen from the report that backs up many of the finding that have been posted in this blog over the last 3 months. The real shock is how much blatant fraud appears to have taken place and the fact that almost everything that LCF claimed was actually lies. No security for loans, no due diligence, no 200 companies lent money. They have confirmed that they estimate a return as low as 20% of the money that bondholders invested in LCF so for a £10,000 bond you would only get £2,000 back. Loans made with no security for them and little chance of repayment Interest payments from borrowers ceased in Sept 2018 . LCF were still claiming no defaults even at Dec 2018 Loan of £12 million made to a company with no bank account Loans made to only 4 groups of companies One company group was loaned a total of nearly £155m , a massively risky pr

It's become clear that warnings were provided to the FCA about LCF as far back as 2015 by an Independent Financial Adviser. Other warnings were given from 2017 onwards where the FCA and Advertising Standards Authority (ASA) were playing a game of ping pong bouncing complaints between each other rather than actually acting. Dealing with these at the time might have prevented near 12,000 investors getting burnt to the tune of £236 million. This sequence of emails starts with the reporting to the ASA of the website Top-ISA-Rates.co.uk that was promoting LCF bonds. Report 1 Sent to Advertising Standards - Reply 1 Below Dear Mr XXXX, Thank you for contacting the Advertising Standards Authority (ASA) with your complaint about Top ISA Rates. Our remit The material you complained about is not covered by the Advertising Rules because aspects of non-broadcast advertising for most financial ads are subject to statutory control by the Financial Conduct Authority (FCA). For that r

Bede Events - Osborne Horse Trials Sponsorship London Capital Finance were the main sponsor of the Bede Events Osborne Horse trials in 2018 with sponsorship believed to total £60,000 as well as significant corporate hospitality at the event and free drinks as shown in the post below. Free drinks from your sponsor might have seemed like a great wheeze but when that money came from investors who have now lost their savings, Bede Events might want to reconsider the prizes given out. It's very easy to give prizes and lavish corporate hospitality with other people's money. Now that London Capital Finance has been shown to be a ponzi scheme where investors are likely to lose over 80% of their money will Bede Events be paying back the sponsorship ? The £60,000 would appear to be money stolen from unsuspecting savers including pensioners and those trying to build a nest egg for their future. LCF Sponsor Bede Events Osborne Horse Trials 2018

Blackmore Bonds Website Removes all Bond marketing- Why? UPDATE - Blackmore have now confirmed that they have reached their targets this tax year so no longer need any further funds. There has been an interesting development with Blackmore Bonds, the high risk mini bond provider that was promoted by Surge Financial in the same way as London Capital & Finance . Blackmore bonds were promoted by the websites Top ISA rates and replaced LCF bonds at the top of the lists when they were shut down by the FCA after their marketing was directed to be removed. Blackmore Bonds Closed FCA Action? Recently the Blackmore website became very transparent making it clear to investors that they were paying up to 20% commission to Surge for business and that there were significant risks for investing in their bonds. As of 23 March 2019 the Blackmore Bond website has been completely stripped back and now only shows a few details of their projects. This follows an investigation by BBC M

Improve my ISA are plugging their products heavily at the moment, probably with the tax year ending soon. As with LCF the adverts for Improve my ISA are incredibly misleading with no mention of the risks and that the product is not FSCS protected. Improve My ISA Risk Warning The Improve My ISA website is similarly misleading and only has very tiny writing at the end of a page mentioning any risks but plenty of other information about how great it is. The ad and website also claim " Security Trustee and ISA manager are authorised and regulated by the Financial Conduct Authority "  however they fail to say that this has no relevance to an investor in the bond who could still end up losing all their money. The company behind Improve My ISA is shown as Global Property Marketing Ltd. Their most recent accounts show they have the grand sum of £1 in assets. Yes, that is one single UK pound. Not one million, just one. This may have changed but the accounts are correct at

The SFO announced that they had arrested 4 people in connection with the collapse of London Capital & Finance. These people are reported to include the CEO of LCF Andy Thomson and former CEO Simon Hume Kendall who is currently CEO of LCF's biggest borrower London Oil and Gas that has £122 million of loans outstanding to LCF. Andy Thomson, CEO of LCF It's interesting that one name missing from the list of those arrested was Paul Careless, CEO of Surge Financial that was given 25% of bondholder's money by LCF as commission and for running their account administration services which amounted to £60 million. Notably the spokesman for Surge Financial stated to the Evening Standard that "no-one from Surge had any contact with the police whatsoever ". This seems a very adamant denial from Surge which brings to mind the from Shakespeare quote " thou doth protest too much ".  Is there another reason why Paul Careless and Surge are so keen to de

Does today mark the beginning of the end of Brexit? Theresa May has just asked for an extension of UK membership of the EU to the end of June 2019. It appears that the EU has said that this extension is only possible if Theresa May's deal is passed by the House of Commons next week. If not then it means No Deal is very much back on the agenda. So there are 3 potential options next week: Vote for the Withdrawal agreement No deal Revoke Article 50 The Brexiteers in the Conservative party ERG group are likely to see No Deal as being their preferred option and vote down the Withdrawal agreement to get this outcome. However the House of Commons has clearly voted against No Deal being an option so if the EU is unable to grant an extension of the Article 50 process then the only other option will be to revoke Article 50 and begin the process again. Theresa May is now due to give an address to the country at 8pm. Will my prediction from last year be correct?  https://damn-l

Quite a few bondholders have commented that they bought LCF bonds because they saw them being advertised by Martin Lewis of Money Saving Expert or being shown on his website. There is no evidence that the London Capital & Finance bonds were ever promoted or listed on Money Saving Expert or by Martin Lewis. Indeed the main information on MSE was lots of warnings on the forums letting people know the risks involved in investing in the bonds. However one site I noticed earlier may have caused some of this confusion. A video of Martin Lewis is playing with a subject line showing of "Cash ISAs aren't worth it anymore" in the middle of a section about High Return ISAs that mentioned London Capital & Finance. LCF Martin Lewis Advert Moneysaving Expert It is possible and far more likely that this sort of news feature is the root of these bondholders believing that Martin Lewis or MSE were promoting the bond. In reality Martin Lewis would have no idea that his vide

HMRC have contacted London Capital & Finance bondholders that purchased ISAs to let them know that the ISAs have been voided and invalidated which means that they can still use their 2018/19 allowance before the end of the tax year. London Capital & Finance HMRC ISA Tax Notice The bad news is that any interest payments made on accounts that were meant to be ISAs are now taxable so investors may owe HMRC tax on their 8% interest payments already received which will be another kick in the teeth to investors who may have lost over 80% of their money when LCF collapsed. The other key point from the notification is that when any money is recovered it will not be eligible to remain as an ISA either so will count against normal annual limit of £20,000. With a 20% suggested maximum recovery rate it's unlikely to affect too many people who transferred previous ISAs to LCF. Any LCF investors who receive this notice from HMRC should also be aware that they do have a £1000

It has been revealed by the SFO that they have opened an investigation into London Capital & Finance and that 4 people linked to the company have been arrested and released. This has been launched under the code name  Operation Axite. I'm sure anyone who has followed the activities of LCF over the last few months will not be surprised at this turn of events and it ties into information we were given over a month ago but was unable to publish at the time. It's not been officially confirmed by the Serious Fraud Office who the 4 arrested individuals were but we understand the names from various sources. There is no implication of any guilt on the part of these 4 people and they have been released without charge after assisting the SFO with their enquiries. As people close to LCF it is understandable that the SFO would want to speak to them about the situation. Andy Thomson  Simon Hume Kendall Spencer Golding Elten Barker Photo of Andy Thomson Andy Thomson (Mich

These are the notes from a meeting of 22 bondholders with Finbarr O'Connell, Adam Stephens and Guy Wilkes, an FCA specialist from Mishcon De Reya on 18th March 2019 The meeting began well until the point that Finbarr advised us that, at present, he can account for only 20% of the value of the funds lent to the Borrowers and Sub-Borrowers. He is hopeful of recovering these assets within a year. He went on to say that when he interviewed one key person involved in this sad affair that person admitted to receiving millions of pounds of bondholders' money into his personal bank account. This character went on to admit how further millions had gone into the bank accounts of 3 other key people relating to LCF and associated companies. Whilst there are arguments as to why these monies were received by these people, they are mostly to do with the sale by them of assets to LCF and its associated companies. However, these assets have not shown themselves to be of any substantial v

There was a meeting of bondholders with the administrators from Smith & Williamson. It was announced at the meeting that London Oil and Gas Ltd that borrowed £122 million from London Capital & Finance has gone into administration. https://www.independentoilandgas.com/news_detail.php?Title=London-Oil-and-Gas-(%27LOG%27)-Limited-Update The administration is being managed by the same team at Smith & Williamson also managing the London Capital Finance administration. One of the largest loans London Oil & Gas made was to Independent Oil (IOG).  It was interesting to see that London Oil & Gas have the right to appoint 2 board members of Independent (IOG) confirmed in this announcement Aside from any contractual relationship created by the LOG Loans and the attendant right for LOG to appoint two directors to the Board, IOG and its Board are independent of LOG and the Company has a separate, refreshed and robust governance structure. Their CEO Andrew Hockey said t

It has been revealed by the SFO that they have opened an investigation into London Capital & Finance and that 4 people linked to the company have been arrested and released. This has been launched under the code name  Operation Axite. I'm sure anyone who has followed the activities of LCF over the last few months will not be surprised at this turn of events and it ties into information I was given over a month ago but was unable to publish at the time. It's not yet been confirmed who the 4 individuals were but it would be likely to include Andy Thompson and the other LCF directors who live in Kent and the Kent/Sussex borders. We have no information whether it also includes Paul Careless of Surge Financial who is also based in Sussex. The press release reads: The Serious Fraud Office, working in conjunction with the Financial Conduct Authority, has opened an investigation into individuals associated with London Capital & Finance Plc.  On 4 March 2019, four indi

Blackmore Bonds are a similar investment to London Capital & Finance paying high rates of interest on mini bonds that they have sold as well as paying 20% commission to Surge Financial for managing the administration of the bonds. They have recently revamped their website to make warnings much clearer and showing that 20% fees are paid from your capital. Blackmore bonds risk warnings They claimed in a statement that "the first bond maturity is in 2020 and that all interest payments have been made on time" Blackmore Bond Capital Repayment Dates - When are they due? With their new found transparency on their website and much clearer risk warnings I suspect that their inflow of new funds might dry up quite quickly Please note that as with any investment your capital is at risk and the risk mitigation scheme does not guarantee a return of capital and interest. The key limitations to this policy are as follows: The legal charge over the assets of Blackmore Bo

BBC South West Inside Out programme features a section on London Capital Finance on their 11/9/2019 edition. You can view here at 11 mins into the programme where reporter Tom investigates BBC Inside Out London Capital Finance https://www.bbc.co.uk/iplayer/episode/m0003bqq/inside-out-south-west-11032019

After London Capital and Finance going bust and leaving investors out of pocket I thought it might be interesting to review other similar mini bonds to see if any of the same characteristics were present. I already knew that Blackmore Bonds had a similar setup to LCF by paying Surge Financial  20% fees on the sale of their bonds but another company that is currently advertising heavily is Basset & Gold .  It isn't made clear but this is an investment where you could lose 100% of your money. Basset Gold ISA Bond Review Basset Gold are using similar imagery as LCF with apparently happy elderly savers pictured. Unlike LCF the advert does have the words "Capital at Risk" more clearly shown but they also then use the FCA authorisation to give themselves more credibility when the product on offer is not regulated or covered by the FSCS despite their claims to the contrary. Basset & Gold appears to be 2 companies, one called Basset & Gold PLC  formed in