London Capital & Finance: 236m firm collapses

[nitpicker]

https://www.bbc.com/news/uk-england-47454328

London Capital & Finance: £236m firm collapses

By Tom Palmer
BBC News Online

9 March 2019

Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed. London Capital & Finance (LCF), now in administration, took £236m following a marketing campaign that is now under investigation for mis-selling. Many were first-time investors - inheritance recipients, small business owners or newly retired.
(snip)

LCF paid an agent, Brighton-based Surge PLC, 25% commission - which amounted to £60m - to run the marketing campaign.
(snip)

In a letter to bondholders administrator Finbarr O'Connell said once the £60m to Surge was paid, returns of up to 44% would be required in order for LCF to make good on its promises.

Investors were told the funds - and therefore risk - would be spread across hundreds of companies but, according to Companies House records, LCF loaned money to 12 - four of which have never filed accounts, nine are fewer than three years old, and nine had loans from LCF in 2017.

Much of the cash was loaned to companies that then "sub loaned" to others. Bondholders have raised concerns about connections between the directors of companies that received money and those who ran LCF.
(snip)

[SWBTATTReg]

1. Chasing such outrageously high returns did these investors in. Don't believe any ridiculous ...

claims that scammers like this make literally make every day. I know interest rates on CDs and money markets, etc. aren't great, but losing it all is worse. Scumbags. They basically called it (their scheme) a different name that no one has heard of before and thus, obviously, people thought the investment was okay.

Obviously not.

[muriel_volestrangler]

2. And the majority shareholder of Surge PLC which took 25%"commission" is ... "Paul Careless"

Last edited Sat Mar 9, 2019, 07:26 AM - Edit history (1)

The scheme looks largely like a way to take 25% of the marks' money in "marketing commission". After that, they invested what was left in high-risk loans in the vague hope they'd get back enough money to pay the 'interest', and then claim there was a capital loss that their small print allowed for. None of which I think would have stood up to proper accountancy examination.

A spokesman for Surge Financial said: "Surge has a number of clients and its fees for LCF are in line with the industry standard.

That sounds like bollocks to me. You can't take 25% from a 3 year investment (let alone a 1 year one) and stand a realistic chance of it making good money. There's certainly no way you can call it 'standard'.

I've found a couple of moneysavingexpert forums posts on this company from the last 3 years - with the phrase "don't touch with a bargepole" coming up more than once.

https://forums.moneysavingexpert.com/showthread.php?t=5346049
https://forums.moneysavingexpert.com/showthread.php?p=71665855

The collective wisdom of that forum seemed to work pretty well - people questioning why a scheme with no guarantee, and which could lose all your capital, was being marketed as if it was a regular interest-paying ISA. And they found that it had a sponsored listing on "https://www.best-savings-rate.co.uk/" - which is run by "RPDigitalServices Ltd", now owned by our friend Paul Careless: https://beta.companieshouse.gov.uk/company/09709854/filing-history - though one Ronak Patel was the owner in 2016. They also own "best-investment-rates.co.uk" and "top-isa-rates.co.uk". And look at this:

Until the FCA shut down London Capital and Finance, one of its most important promoters was RPDigitalservices, the company behind the top-isa-rates.co.uk and best-savings-rates.co.uk websites.
...
RPDigitalservices is not authorised by the FCA to issue financial promotions to the public.

RPDigitalservices was one of the most important sources of investment for London Capital & Finance. At the time they were promoting LCF, analytics data from Alexa showed that half of visitors to LCF’s websites had previously visited RPDigitalservices.
...
After London Capital & Finance was shut down by the FCA, RPDigitalservices switched to promoting Blackmore Bond.

https://bondreview.co.uk/2019/02/26/rpdigitalservices-former-chief-promoter-of-london-capital-finance-stops-promoting-unregulated-investments/

All highly dodgy.