LONDON (Reuters) – Britain’s finance ministry said on Thursday it had appointed former judge Elizabeth Gloster to investigate the collapse of investment firm London Capital & Finance (LCF) and how it was supervised by the Financial Conduct Authority (FCA).
LCF went into administration in January with losses of up to 237 million pounds from mini-bond investments. While LCF itself was regulated by the FCA, the mini-bonds, used to raise funds for small businesses, are not regulated.
The ministry said in a statement it was also undertaking a wider policy review of the regulatory regime for “mini-bonds” and similar types of securities.
The ministry had said in April it was ordering the FCA to commission an independent review into LCF, and Thursday’s announcement confirms its launch and who will lead it.
Gloster, whose appointment was approved by the ministry, will report her findings to the ministry.
“We urgently need to get to the bottom of the circumstances around the collapse of LCF,” financial services minister John Glen said in a statement.
FCA Chair Charles Randell said on Thursday the investigation would establish what happened at LCF and whether further changes were needed.
“It will support the broader review of mini-bond regulation,” Randell said.
Smith & Williamson, appointed administrators for LCF in January, has said that 11,500 bondholders are unlikely to get more than 20 percent of their 237 million pound investment back.
Gloster’s review will be separate from a Serious Fraud Office investigation into individuals associated with LCF.
(Reporting by Huw Jones; Editing by Mark Potter)