FCA under pressure to publish review into handling of the LCF scandal

The City watchdog is under pressure to publish a long-awaited review into its handling of the London Capital & Finance (LCF) savings scandal.

The Financial Conduct Authority (FCA), which has been slammed by LCF victims for failing to act on warnings about the collapsed firm, was finally handed a copy of Dame Elizabeth Gloster’s independent review on Monday.

But the 11,600 victims who have lost around £237million are still waiting to see Gloster’s findings, as the FCA will now read the report, write its own report on the findings, and finally send both documents to the Treasury for publication.

LCF tumbled into administration in January 2019, after selling ‘minibonds’ to thousands of savers. 

They were promised high returns for low risk, as LCF said it would lend their money to businesses which needed the money to grow.

But investors were left high and dry when the firm collapsed, and it turned out that their money had been funnelled to a small number of borrowers.

Thirteen people connected to LCF are now being sued for £178million in connection with an alleged fraud, after it was claimed that savers’ cash was used to buy horses, a helicopter and a lifetime membership to a Mayfair private members’ club. 

Investors are furious they now face even more delays in their search for answers from the FCA.

Gloster, a former Court of Appeal judge, was initially due to report in July but had to push the deadline back after the FCA revealed heaps more evidence.

Andrea Hall, an LCF victim who has formed a campaign group, said: ‘We have got victims who are near the edge. 

There are people who have been evicted from their homes because they lost all their pension savings. Some have lost hundreds of thousands of pounds.

‘So many victims invested because they believed LCF was regulated by the FCA. We think the FCA needs to compensate us.’

Although LCF was regulated by the watchdog, the minibonds were not. The FCA was also warned by financial advisers as early as 2015 that the returns LCF was promising looked too good to be true, and yet the regulator still took no action.

John Glen MP, Economic Secretary to the Treasury, said yesterday: ‘I have asked the FCA to work with the Treasury so that the Government can lay before Parliament Dame Elizabeth’s report and the FCA’s response before the December recess.’

The FCA said: ‘The report will be submitted to HM Treasury, along with our response on lessons learned and recommendations, as soon as possible.’ 

The FCA and the Serious Fraud Office are both still conducting probes into the events at LCF.