Asked by: Deidre Brock (Scottish National Party - Edinburgh North and Leith)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, who will administer the London Capital and Finance compensation scheme.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In my Written Ministerial Statement on 17 December 2020, I outlined the 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.
My statement also announced 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, including on timescales, the scheme’s administering body, and the eligibility of compensation, in due course.
Asked by: Deidre Brock (Scottish National Party - Edinburgh North and Leith)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether his Department is planning to impose any restrictions on compensation to bondholders under the London Capital and Finance compensation scheme.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In my Written Ministerial Statement on 17 December 2020, I outlined the 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.
My statement also announced 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, including on timescales, the scheme’s administering body, and the eligibility of compensation, in due course.
Asked by: Mike Amesbury (Labour - Weaver Vale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to support people that have lost savings as a result of the collapse of London Capital and Finance.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure. The Financial Services Compensation Scheme (FSCS), as the compensation scheme of last resort, can only provide compensation for claims connected with certain types of regulated activities.
The FSCS has been working closely with LCF’s administrators and the Financial Conduct Authority to understand more about LCF’s activities. This investigation led FSCS to announce certain key decisions in relation to LCF in January 2020. First, the FSCS has announced it will protect LCF bondholders who switched from stocks and shares ISAs to LCF bonds. The FSCS has now paid £2.7m compensation to these LCF customers. Second, the FSCS has announced it is unable to protect LCF bondholders who dealt with LCF before it was authorised to carry out financial services business. The FSCS will contact these LCF customers to confirm this. Third, the FSCS has said that there will be some LCF customers who were given misleading advice by LCF, and who will have valid claims for compensation. The FSCS will provide a further communication with details of when and how customers in this category can submit their claims. The FSCS will aim to start reviewing these advice claims in the first quarter of 2020.
The FSCS will provide a further update by the end of March outlining the next steps. In the meantime LCF customers do not need to take any action. Further information can be found at https://www.fscs.org.uk/failed-firms/lcf/.
Asked by: Laura Smith (Labour - Crewe and Nantwich)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department taking following the collapse of London Capital & Finance to ensure that mini-bond holders in Crewe and Nantwich will be properly compensated.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure.
The Financial Services Compensation Scheme (FSCS), as the compensation scheme of last resort, can only provide compensation for claims connected with certain types of regulated activities. They are working closely with LCF’s administrators and the Financial Conduct Authority (FCA) to understand more about LCF’s activities and whether there are grounds for compensation.
The FSCS is an independent non-governmental body. The FSCS carries out its compensation function within rules set by the Prudential Regulation Authority (PRA) and the FCA, who are also independent of Government.
If there are circumstances that give rise to potentially valid claims, the FSCS will communicate this on their website. They have invited LCF investors to register for updates on their website. More information on this can be found at https://www.fscs.org.uk/failed-firms/lcf/.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government why the terms of reference for Dame Elizabeth Gloster's inquiry into the circumstances surrounding the collapse of investment firm London Capital & Finance and the Financial Conduct Authority’s supervision of the firm do not include the impact on affected savers.
Answered by Lord Young of Cookham
On 23 May, the Treasury formally directed the Financial Conduct Authority (FCA) to launch an independent investigation into the events at London Capital & Finance (LCF), and approved the FCA’s appointment of Dame Elizabeth Gloster to lead it. The investigation will look at 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 will be able to consider any other matters she deems relevant to the events set out in the Treasury’s direction to the FCA.
Dame Elizabeth is an experienced barrister, leading QC and Judge at the High Court and Court of Appeal. The Treasury is satisfied that she will be able to lead a robust and independent investigation.
The Treasury has stipulated that the investigation should be completed within 12 months, whilst allowing the investigator to report sooner than 12 months if this is feasible. This will ensure that the investigation is as thorough as possible and that the right lessons are learned to better protect those who invest their money in the future.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the role Dame Elizabeth Gloster played as counsel in cases arising out of (1) the insolvency of Barlow Clowes, and (2) the payment of compensation to investors in that firm's funds.
Answered by Lord Young of Cookham
On 23 May, the Treasury formally directed the Financial Conduct Authority (FCA) to launch an independent investigation into the events at London Capital & Finance (LCF), and approved the FCA’s appointment of Dame Elizabeth Gloster to lead it. The investigation will look at 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 will be able to consider any other matters she deems relevant to the events set out in the Treasury’s direction to the FCA.
Dame Elizabeth is an experienced barrister, leading QC and Judge at the High Court and Court of Appeal. The Treasury is satisfied that she will be able to lead a robust and independent investigation.
The Treasury has stipulated that the investigation should be completed within 12 months, whilst allowing the investigator to report sooner than 12 months if this is feasible. This will ensure that the investigation is as thorough as possible and that the right lessons are learned to better protect those who invest their money in the future.
Asked by: Lord Myners (Crossbench - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government why 12 months have been allowed for the completion of Dame Elizabeth Gloster's inquiry into the circumstances surrounding the collapse of investment firm London Capital & Finance and the Financial Conduct Authority’s supervision of the firm.
Answered by Lord Young of Cookham
On 23 May, the Treasury formally directed the Financial Conduct Authority (FCA) to launch an independent investigation into the events at London Capital & Finance (LCF), and approved the FCA’s appointment of Dame Elizabeth Gloster to lead it. The investigation will look at 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 will be able to consider any other matters she deems relevant to the events set out in the Treasury’s direction to the FCA.
Dame Elizabeth is an experienced barrister, leading QC and Judge at the High Court and Court of Appeal. The Treasury is satisfied that she will be able to lead a robust and independent investigation.
The Treasury has stipulated that the investigation should be completed within 12 months, whilst allowing the investigator to report sooner than 12 months if this is feasible. This will ensure that the investigation is as thorough as possible and that the right lessons are learned to better protect those who invest their money in the future.
Asked by: Gordon Marsden (Labour - Blackpool South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he plans to establish an ad hoc compensation scheme for people affected by the collapse of London Capital and Finance.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure.
The Financial Services Compensation Scheme (FSCS), as the compensation scheme of last resort, can only provide compensation for claims connected with certain types of regulated activities. They are working closely with LCF’s administrators and the Financial Conduct Authority to understand more about LCF’s activities and whether there are grounds for compensation.
If there are circumstances that give rise to potentially valid claims, the FSCS will communicate this on their website. They have invited LCF investors to register for updates on their website. More information on this can be found at https://www.fscs.org.uk/failed-firms/lcf/.
Asked by: Rosie Duffield (Labour - Canterbury)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will publish the directions, as listed under section 78(5) of the Financial Services Act 2012, which the Treasury has given to the Financial Conduct Authority for its inquiry into London Capital & Finance.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
I have today laid a Direction before Parliament requiring the Financial Conduct Authority to carry out an independent investigation into the events and circumstances surrounding the failure of London Capital and Finance.
Asked by: Mike Amesbury (Labour - Weaver Vale)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department taking in relation to unregulated mini-bonds following the collapse of London Capital & Finance.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
On 1 April, the Government announced it will direct the Financial Conduct Authority (FCA) to launch an investigation into the events and circumstances surrounding the failure and placing into administration of London Capital and Finance plc (LCF). This followed a request from the FCA Chair, Charles Randell, to launch such an investigation.
On 23 May 2019, the Government laid a direction before Parliament setting out the terms of the investigation. Alongside this, the Government announced it will separately review the wider policy questions raised by this case.
Although operationally independent, the Financial Services Compensation Scheme (FSCS) and the FCA are both accountable to HM Treasury and to Parliament. My officials and I engage with the FCA and FSCS on an ongoing basis, and HM Treasury continues to work with the relevant bodies on the failure of LCF as a matter of priority. The FSCS is also continuing work to increase awareness and understanding of FSCS protection.