FCA has censured London Capital & Finance for issuing misleading financial promotions about minibonds to retail investors. The promotions made the minibonds look a more attractive investment than they were and failed to tell investors about matters such as hidden charges and the high risk and unsustainable nature of the lending LCF was doing. FCA found that bondholders’ money funded what looked like independent comparison websites, which showed the return on the LCF minibonds as significantly better than that on the safer investments also featured. This in turn had the effect of enticing retail investors to invest in the minibonds. LCF also said the minibonds were ISA-compatible, when they were not.
The reason for a censure rather than a fine is to allow as much money as is available to be available for the bondholder creditors.
Meanwhile, SFO is still considering whether there are grounds for action against LCF and those running it for knowingly defrauding bondholders.