What Did FCA Actually Regulate with London Capital & Finance?
What did FCA actually do for authorising and regulating LCF for lending?
FCA have been very clear that LCF was not regulated for investments or savings so no compensation was payable to investors who have lost money when LCF collapsed in 2019. However they have been far less clear about what they DID actually regulate LCF for.
According to the FCA register LCF were authorised for the following activity "The firm must not conduct designated investment business other than corporate finance business."
Yet the entry on the FCA website is STILL very unclear - according to the screenshot above from Jan 2020 their current status is "Fully Authorised". How are investors meant to know the difference?
https://www.fca.org.uk/firms/authorisation/how-to-apply/financial-services
Even if we accept that FCA have no regulatory requirement to monitor LCF for mini-bonds sold to consumers they were regulated for Corporate finance business but what does this actually mean?
Do the FCA do anything before granting such permissions and retaining that regulatory approval? Or is it an automatic approval without any checks?
LCF was doing the following lending activities:
These are the activities visible without any internal knowledge of the company, the true situation may include even more dubious practices.
How can it be possible that a company regulated by the FCA for lending can carry out these activities for nearly 4 years without any form of checks?
FCA have been very clear that LCF was not regulated for investments or savings so no compensation was payable to investors who have lost money when LCF collapsed in 2019. However they have been far less clear about what they DID actually regulate LCF for.
According to the FCA register LCF were authorised for the following activity "The firm must not conduct designated investment business other than corporate finance business."
Yet the entry on the FCA website is STILL very unclear - according to the screenshot above from Jan 2020 their current status is "Fully Authorised". How are investors meant to know the difference?
https://www.fca.org.uk/firms/authorisation/how-to-apply/financial-services
Even if we accept that FCA have no regulatory requirement to monitor LCF for mini-bonds sold to consumers they were regulated for Corporate finance business but what does this actually mean?
Do the FCA do anything before granting such permissions and retaining that regulatory approval? Or is it an automatic approval without any checks?
LCF was doing the following lending activities:
- 25% of all bond money received was paid out as fees to Surge Financial
- Lending money to companies with no assets & no income
- Lending money to companies before any agreement was in place
- Lending money to companies without any rights over their assets
- Lending money to only 12 companies owned by friends
- Lending money to company without a bank account
These are the activities visible without any internal knowledge of the company, the true situation may include even more dubious practices.
How can it be possible that a company regulated by the FCA for lending can carry out these activities for nearly 4 years without any form of checks?
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