London Capital & Finance: £236m firm collapses


(Richard) #1

I have to admit, my long term aim is to invest my money but reading articles like this is a concern.

Truthfully I have tried to read and understand it and I’m hoping it’s because I’ve yet to have my morning coffee, but I don’t understand what’s really happened. I thought ISAS were meant to be protected?


#2

If they have FSCS protection then yes up to a certain amount they would have been. But this company was issuing unregulated high risk bonds which don’t have FSCS protection. It sounds like the company mis-lead people, and I feel bad for people who put all their money in this, but some research would have revealed how risky it was, if they were happy with the risk that’s up to them.

I certainly wouldn’t let it put you off investing some of your money in the future.


(NM) #3

I think this is the exact reason it went bust. It misled people into think “high risk bonds” were not high risk and to make it worse they only took out bonds in 6 companies(4 that went bust) rather than the so called 100s that were promised.It sounds like a pyramid scheme(they paid a marketing firm millions to get customers).
I hope the customers get some of the their money back(sadly they probably won’t), but the importance of things like this is not to be drawn in by a large interest rate and read all the documentation you can find against it.


(Rob Crawford) #4

Paul Careless is a director of Surge PLC which ran the marketing campaign promoting LCF”

Could this guy’s name be any more appropriate? :thinking:


#5

I think a major issue is this firm were able to say they were FCA authorised, which reassures people.

It turns out the type of FCA authorisation they had did not authorise them to do what they were doing.

But it’s really hard for comsumers to understand the ins and outs of different types of FCA authorisation. The FCA website is very consumer unfriendly.


(NM) #6

I didn’t not know that…I didn’t realise there were different types of FCA authorisation I thought you either had it or didn’t


#7

It’s terrible what they have got away with

The directors should undergo criminal proceedings


#8

It’s always incredibly sad when people lose substantial amounts of money, but one wonders sometimes just how much research is carried out by clients before they invest their entire financial wealth into schemes such as these? How many sought professional financial advice from independent sources before signing up? I cannot bear to think of the trauma this will cause those affected. This is one reason I will never be a ‘rich’ or ‘wealthy’ man, because I just play it safe all of the time.


(Luke Bebbington) #9

ISAs are not protected. The underlying investment is a bond, from a quick read of the article, and if that company goes bust you could lose your investment.

If it’s too good to be true then it prob is. There is no way you could get 8% return guaranteed. Buyer beware.


#10

Non exhaustive list of regulated activities: https://www.fca.org.uk/firms/authorisation/how-to-apply/activities

Different authorised businesses will have different subsets of authorisations


(Luke Bebbington) #11

Also never put all you investments in one basket. You want to diversify across companies, products, currencies, platforms, etc. It’s sad this stuff isn’t taught in school.


(Splodf) #12

These are called ‘Junk bonds’.

If an investment is offering you 8% return. You’ve got to think someone somewhere is being lent money atb10+%.

With interest rates being so low at the moment and money relatively easy to access, the bank obviously thinks they’re an incredibly high risk loanee, by selling the debt in to you, you’re taking all the risk. (Or in this case part of it if you cant sell all the bonds!).

Long story short. If it sounds to good to be true it is. Research everything and if in doubt seek advice!


(Kevyn) #13

Reading this article this morning, I was thinking of Dozens and its 5% bond. I really like Dozens and I am no way insinuating that there is anything below board, but it just got me thinking it sounds similar.


(Splodf) #14

They’re completely different in every way.

Although the Daily Mail article wouldn’t lead you to believe it.


#15

Same here :face_with_raised_eyebrow:


(Splodf) #16

Dozens isn’t investing your money in anything. It couldn’t be more different.


#17

But presumably you do have to put faith in them to do what they say they will do (put an amount equal to what you invest plus 5% in an independent trustee controlled account). Or does FSCS insurance apply if they don’t do what they say they will do (either because of fraud or negligence) and you end up losing money?

I’m not singling out Dozens here; I’m uncertain about this with most financial products not covered by the FSCS scheme that applies to cash savings.


(Splodf) #18

FSCS up to 50,000 as an investment company.

Got to remember the 5% account cost them less than 5k last month, most months that’s all it would cost as there are issuance limits on the bonds. Which usually look to be £100k meaning only 5% of that is Dozens money.

You really believe an operation this big with that many salaries and financial backgrounds are looking to run off with a few k? When the legit option could reward so much more?


#19

From what they say this is only an initial offering to build trust, and only applies to their bonds, and has a current total cap of £7m. Once they stop offering this trustee account to hold 7 million worth of bond funds your money will be directly invested into the bonds.


(Simon) #20

The whole thing seems extremely suspect.