MPs begin probe into failings surrounding Tunbridge Wells minibond firm collapse

London Capital & Finance [LCF] went into administration in January 2019 after the Financial Conduct Authority [FCA] froze its bank accounts.

LCF had been selling minibonds, offering interest rates as high as eight per cent, marketed predominately on social media.

The FCA is accused of failing to act despite a number of ‘red flags’ including specific and detailed allegations about LCF being made to the regulators from third parties.

LCF had been set up by Tunbridge Wells businessman and former local Conservative party chairman, Simon Hume-Kendall, who went on to become one of the firm’s biggest borrowers through a number of his other businesses.

A Serious Fraud Office investigation was launched following the collapse of LCF and five men have been arrested, but yesterday [Monday, February 1] the House of Commons Treasury Select Committee began its probe of the role of the FCA in the scandal. 

Dame Elizabeth Gloster, a QC who led an investigation into FCA’s handling of LCF’s collapse, told the Committee that the watchdog’s failure was the ‘real wickedness’, the London Evening Standard reports.

Under questioning from MPs, she said: “The real wickedness here was that LCF was frequently breaking the financial promotion rules but nothing was done about it.

“If that information had been [connected] with other information, something might have been done earlier.”

Dame Gloster’s 500-page report was compiled after meeting more than 150 bondholders, who she said had ‘suffered mentally and physically and ‘suffered real hardship and not just financial’.

She told MPs that the former head of the FCA and now current Governor of the Bank of England, Andrew Bailey, had inherited a deeply flawed regulator, but could not evade responsibility for failing to fix it quicker.

She said: “The problems which were there were not so fundamental that they could not have been fixed by specific, focused changes. It is not an adequate reason or excuse to say: ‘if only it had been later, the changes we are putting in place would have prevented it happening.’”

Mr Bailey issued an apology to LCF bondholders after publication of the Gloster report, saying that despite a ‘substantial reform programme’ to the supervision of firms that took place under his watch, he was ‘sorry those changes did not come in time’ for the investors.

Share this article

Recommended articles


Please enter a search term below.

Subscribe To Our Newsletter