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26-04-2019 Written by admin Category: Financial Crime

Four arrests have been made as part of a Serious Fraud Office investigation into investment company London Capital & Finance, which went into administration in January. The defunct firm is under investigation for mis-selling. Thousands of investors were drawn in by a £60m marketing campaign which promised secure ISAs with a high rate of interest. In fact, money was being loaned to small businesses at very high risk. Investors could see as little as 20% of their money returned.

The Financial Conduct Authority, or FCA, froze LCF’s accounts in December, following a marketing campaign which gave consumers the impression that they were investing in a Financial Conduct Authority-regulated ISA scheme. The money was instead invested in ‘mini-bonds’; high-risk loans to a very small number of small businesses. Several of these, in turn, loaned money to other businesses. Since the scheme was not an ISA, consumer investments will not attract the protections afforded by ISA status, making serious financial losses very likely.

Investors have also raised concerns about links between LCF and the businesses it loaned to, as well as between marketing firm Surge, which ran the £60m marketing scheme, and a price comparison website used to compare the ‘ISA’ favourably with those from high street banks. It seems likely that this scandal is only just beginning to unfold, but what is already clear is the huge human cost. Many victims have been left devastated and financially insecure by the loss of their savings to a scheme they were told was safe.

What is Mis-Selling?

In a nutshell, mis-selling is not giving someone the information they need to make an informed decision about buying a product, financial or otherwise. When discussing financial products, this information could be false, unsuitable to the client, or just inadequate, for example by leaving out the risks involved. LCF advertised its bonds as ISAs, which are a very different product with a much higher standard of protection. This is a clear case of mis-selling.

Is Mis-Selling a Criminal Offence?

It can certainly lead to a conviction. Mis-selling is not a named offence in itself, but it could create or be part of a case against you. Most obviously mis-selling could be classed as fraud by misrepresentation under the Fraud Act 2006, but this is a fluid area with a lot of overlaps and prosecutors are often strategic in their charging choices. If you are worried, the best thing to do is get in touch with a qualified criminal defence solicitor today, like those at Wilford Smith.

Contact our Fraud Defence Solicitors London, Sheffield and Manchester

Our Fraud Defence Lawyers are based in London, Sheffield and Manchester and advise and represent clients throughout England and Wales. Contact us today on 0808 168 5813 or complete our online enquiry form to find out how we can help.