Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

James Grundy Excerpts

2nd reading
Tuesday 8th June 2021 Commons Chamber

[James Grundy (Leigh) (Con)]

I thank the Minister and the Economic Secretary to the Treasury for bringing this Bill to the House. I welcome this Second Reading debate and am pleased that the Government are making tangible progress. I also thank Dame Gloster for her report and welcome the fact that the Government have accepted its nine recommendations. My contribution will be brief and I hope that, given the time constraints, Members will forgive me for not taking interventions.

Will my hon. Friend the Economic Secretary clarify whether bondholders will be required to surrender all their bonds to qualify for the Government’s scheme? If that is the case, some of my constituents who invested considerable sums in the scheme will be forced to surrender all their bonds, regardless of the amount invested, to receive the maximum £68,000 of compensation offered by the Government, as opposed to their being able to surrender a portion of their bonds to gain access to the Government’s compensation scheme while still potentially being able to receive further dividend payments direct from the administrators, thereby ensuring that their loss is reduced. My constituents need clarity and it would be most welcome if the Department would consider that. I recently wrote to my hon. Friend about this matter and very much look forward to hearing his response.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill

James Grundy Excerpts

Report stage & 3rd reading
Wednesday 22nd September 2021 Commons Chamber

[James Grundy (Leigh) (Con)]

I am pleased that the Government have offered compensation to investors who fell victim to the collapse of London Capital & Finance. Many are set to lose significant sums through no fault of their own, having invested in a Financial Conduct Authority approved company and followed advice from London Capital & Finance that the Government and Dame Gloster concluded was misleading. A number of my constituents fall into that category and they have asked that I speak for them today.

The Government have acknowledged that the situation regarding London Capital & Finance is unique and exceptional. As such, the Government stepped in to create a compensation package on a one-off basis. Bondholders invested in what they believed was a regulated and approved company, which of course it was, and the Government expect to pay out significant sums to those affected and eligible. I welcome that. The group of women I met in my constituency who are affected by this issue are not millionaires, and nor were they trying to make a quick buck by investing in risky, speculative finance. These are ordinary people who invested their hard-earned savings in what they believed to be a solid, officially approved and properly regulated product.

Bondholders have been badly let down by London Capital & Finance, but they have also been let down by the regulatory system that was designed to protect them. The independent investigation led by Dame Elizabeth Gloster, which the Government published at the end of last year, concluded that the Financial Conduct Authority did not discharge its functions in respect of London Capital & Finance in a manner which enabled it to effectively fulfil its statutory objectives during the relevant period. Due to the Financial Conduct Authority’s significant regulatory failure, there is a case to be made that the Government scheme ought to provide the same level of compensation as the Financial Services Compensation Scheme, namely 100% of loss capped at £85,000 instead of the current £68,000.

Finally, I would be grateful if my hon. Friend the Minister would write to me to clarify when the Treasury will release details of the timescale of the compensation process, so I can pass that on to my affected constituents. I hope the Government will give due consideration to the points I have raised in today’s debate.