Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to Dame Elizabeth Gloster's report entitled, Independent Investigation into the Financial Conduct Authority’s Regulation of London Capital & Finance plc, published on 23 November 2020, what steps he has taken to implement the recommendations of that report and re-compensate bondholders.

The Government recognises that this has been a very difficult time for LCF bondholders. That is why on 23 May 2019, following a request from Charles Randell, Chair of the FCA, we formally directed the FCA to launch an independent investigation into the events at LCF, and approved the FCA’s appointment of Dame Elizabeth Gloster to lead it.

Dame Elizabeth’s independent investigation considered the events and circumstances surrounding the failure of LCF and whether, in its supervision of LCF, the FCA discharged its functions in a manner which enabled it to effectively fulfil its statutory objectives. Dame Elizabeth delivered her report to the FCA on 23 November 2020, and the report alongside the FCA’s response was published on 17 December 2020. A Written Ministerial Statement was made on the same day setting out the Government’s response. These documents are available online at gov.uk.

Dame Elizabeth makes nine recommendations for the FCA. The Government welcomes the FCA’s apology to LCF bondholders and their commitment to implement Dame Elizabeth’s recommendations.

HM Treasury has also accepted the four recommendations that Dame Elizabeth Gloster made for the government regarding the regulatory regime. The Written Statement set out the steps that the Government will be taking to implement them.

As set out in the Written Statement, there are three main channels through which London Capital & Finance plc (LCF) bondholders can seek compensation. These are the administration process, the Financial Services Compensation Scheme (FSCS), and the Financial Conduct Authority’s (FCA) Complaints Scheme.

The Written Statement also set out that, taking into consideration the specific and complex set of circumstances surrounding the collapse of LCF, the Treasury will set up a compensation scheme which will assess whether there is justification for further one-off compensation payments in certain circumstances for some LCF bondholders. The Government will announce further details in due course.