London Capital & Finance
London Capital & Finance Fraud
Estimated impact: £237M investor losses
LCF raised £237M from 11,600 investors through misleading ISA bonds promising 8% returns. Funds were lent to connected parties for high-risk ventures. The FCA failed to act on warnings for years, and the Financial Services Compensation Scheme initially refused coverage.
Decision context
Whether the FCA should have intervened earlier when it received complaints about LCF's marketing of unregulated mini-bonds through regulated ISA wrappers.
Biases present in the decision
Toxic combinations
- Status Quo Lock
- Blind Sprint
Reference class base rates
Across all 146 curated case studies in our library:
Lessons learned
- Cognitive misering in regulatory oversight means complaints are processed bureaucratically rather than analytically
- The regulatory perimeter gap between ISA wrappers (regulated) and mini-bonds (unregulated) was exploited
- Status quo bias in the FCA led to treating each complaint in isolation rather than identifying a systemic pattern
Source: Dame Elizabeth Gloster Independent Investigation into the FCA's Regulation of LCF (2020) (FCA Enforcement)
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