Treasury minister ‘sorry’ for LCF minibond scandal and plans crackdown on online fraud
A Government minister has said sorry to the thousands of UK savers caught up in a minibond scandal that now has the taxpayer on the hook for £120m.
John Glen, economic secretary to the Treasury, told MPs on the Treasury Select Committee: “I want to apologise to the 11,625 LCF bondholders who have endured significant uncertainty.”
London Capital and Finance (LCF) collapsed in 2019, with bondholders facing losses of up to £267m.
A damning report by Dame Elizabeth Gloster said regulators, such as the Financial Conduct Authority, failed to act to protect them and ignored whistleblowers who highlighted potential fraud.
Glen said the Government has launched a consultation to strengthen the minibond market from abuses and wanted to work on ways to improve explaining the schemes to investors.
A report into the collapse of London Capital & Finance recommended that the government should consider including financial fraud in its proposed law on online safety.
LCF was authorised by the Financial Conduct Authority but the mini-bonds it sold online were unregulated.
The government said on Monday it would pay up to £120m in compensation to many of the 11,600 investors who lost up to £237m when the fund collapsed in early 2019. The Serious Fraud Office is investigating the collapse.
The LCF report blamed the FCA’s CEO and executive committee for failing to supervise LCF properly. Three executive members were named, but two have already left and the third, Megan Butler, remains in a different role.
Glen repeatedly declined to say whether it was right that Butler remains in a senior role, saying she was still “significantly respected” by many at the watchdog, and that he would not interfere in operational matters.