Mini bonds in firing line as HM Treasury updates LC&F investigation
HM Treasury (HMT) has today announced details of the independent investigation into the failed investment company London Capital & Finance (LC&F) to be commissioned by the Financial Conduct Authority (FCA), with non-transferable securities, such as mini bonds, also under the spotlight.
HMT said in a statement that it has agreed to the appointment of Dame Elizabeth Gloster by the FCA to conduct the investigation.
On Thursday March 28, the FCA board decided that there should be an investigation by an independent person into the issues raised by the failure of LC&F, with FCA chair Charles Randell writing to the UK's Economic Secretary to the Treasury, John Glen MP, to inform him of this decision.
"Its [the independent investigation] findings will help to properly protect those who invest their money in the future" - John Glen MP, The Economic Secretary to the Treasury
Minibond regulation
Commenting on the announcement, Charles Randell, FCA chair said: "This investigation will establish what happened with LC&F and whether further changes are required. It will support the broader review of minibond regulation. Dame Elizabeth Gloster brings independence and extensive experience to the task, and the FCA will ensure that she has all the access and support she needs to conclude her work as quickly as possible."
The FCA added that it will also contribute to the other reviews announced by the HMT in relation to minibonds and similar securities. "This work is important to ensure that the scope and form of regulation provides effective protection for consumers," the FCA statement added.
The FCA-led independent investigation is separate to the investigation by the Serious Fraud Office, into individuals associated with LC&F.
John Glen, The Economic Secretary to the Treasury, said: "I have also announced today that, alongside this independent investigation, the government will separately review the wider policy questions raised by the case. This will include research into the wider market for non-transferable securities, such as mini bonds, and their role in the economy.
Safer financial system
"The Treasury will begin work alongside this to consider the regulatory arrangements currently in place for the issuance of these investments. The government is committed to creating a stronger and safer financial system. The independent investigation into the supervision of LC&F will ensure that the events and circumstances surrounding the collapse of LC&F are better understood. Its findings will help to properly protect those who invest their money in the future.
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