the times | Tuesday July 28 2020 1GM 41
Business
and Lisa Jacobs, UK managing director. The firm has lost 80 per cent of its market value but believes the economic crisis is showing its true worth
The City regulator has been criticised
for a lack of enforcement action over
misleading financial promotions
despite a spate of scandals which cost
ordinary investors hundreds of mil-
lions of pounds.
The Financial Conduct Authority
did not prosecute any authorised
firm or individual over errant finan-
cial promotions between 2013 and
2019 and fined only three groups of
authorised firms and individuals,
according to a freedom of informa-
tion request.
The regulator also said it did not
remove any authorised firm’s regula-
tory permissions for approving a mis-
leading or inaccurate promotion.
Critics of the FCA said the findings
show “there is no deterrent to prevent
investment fraud”.
Misleading financial promotions
have been at the heart of a series of
scandals, including the collapse of
London Capital & Finance, which
sold £236 million of unregulated
minibonds to about 12,000 investors.
If an unauthorised firm wants to
promote a particular financial pro-
duct, it needs to get the promotion
approved by a firm that is overseen by
the City regulator.
The FCA said 1,916 financial pro-prove a sceptical market wrong
CHARLIE BESTA crisis that could breed confidence
Funding Circle has drifted
a long way from its
original peer-to-peer
model of a direct link for
everyday investors to
lend to small companies
(James Hurley writes).
Individual investors
can no longer pick which
loans they want to back
and, since April, Funding
Circle has been closed to
new retail investors as
they are not eligible to
invest in coronavirus
business interruption
loans.
Asked when the
platform might reopen to
retail, Lisa Jacobs, the UK
managing director, said:
“When we get comfort
around lending to small
businesses being a
proposition which is
suitable for retail
investors.” She says thatthe level of capital being
provided by institutions is
“more than sufficient” to
meet current demand.
Ms Jacobs, 35, replaced
the co-founder James
Meekings as managing
director last year. She
says that progress during
the pandemic is in
contrast to the struggles
of some high street banks
when home-working staff
initially struggled to meet
demand.
“Our model is almost
built for this. It works well
remotely. When everyone
started working from
home we were at 100 per
cent productivity,” Ms
Jacobs says.
She says that stability
through a crisis will give
people confidence in the
model, including first-
time borrowers.City regulator criticised for failure to act
James Hurley Enterprise Editor motions had either been amended or
removed as a result of its oversight.
However, last week the Treasury
said this approach was failing to
protect investors and proposed that
authorised firms would have to ob-
tain specific permission from the reg-
ulator before approving unauthor-
ised firms’ financial promotions.
Mark Bishop, a campaigner who
filed the information request, said the
Treasury proposal would only work if
the FCA took a tougher stance.
“There’s no point checking promo-
tions when you don’t punish those
who are negligent or dishonest.”
The regulator has argued that its
scope to act is limited where firms in
question are outside its “regulatory
perimeter”.
Mark Taber, a consumer cam-
paigner, said the figures showed the
regulator had “neglected its duty”.
He added: “This lack of enforce-
ment action... means there is no de-
terrent to prevent investment fraud.”
An FCA spokesman said: “We have
a wide range of tools to protect con-
sumers from misleading financial
promotions, not just enforcement
action. Where we do see non-compli-
ance with our rules, we have banned
firms from approving financial pro-
motions and suspended certain prod-
ucts being marketed to investors.”Amigo secures waiver extension
A lender to Britain’s biggest
guarantor loans provider has
relaxed the terms of a
£300 million financing facility
that it has with the company
(Ben Martin writes).
Amigo Holdings announced
in May that it had secured a
waiver over the performance
triggers in a securitisation
financing arrangement that it
has with RBC, which is one of
its banks. That waiver had
been due to expire last Friday
but Amigo said yesterday that
it had been extended until the
middle of next month.
Amigo originally secured
the waiver after the Financial
Conduct Authority, which is
the City regulator, told lenders
like Amigo to help customers
during the Covid-19 crisis by
offering forbearance measures
on personal loans. Those
measures have been extended
by the FCA, prompting Amigo
to seek a waiver extension.
Set up 15 years ago by the
entrepreneur James Benamor,
Amigo offers loans of up to£10,000 at annual interest
rates of 49.9 per cent. The
loans are guaranteed by
another individual, usually a
relative or friend.
Amigo has been plunged
into turmoil since listing on the
London Stock Exchange at
275p a share two years ago.
The stock has dropped to
single figures since the
flotation amid mounting
regulatory scrutiny of the
guarantor loans industry and a
surge in customer complaints
at Amigo. The economic
impact of the coronavirus
crisis has piled further
pressure on the business.
Amigo warned shareholders
in its annual results last week
that there was “material
uncertainty” over its ability to
continue as a going concern.
It sounded the warning as
disclosed it swung to a
£37.9 million pre-tax loss in the
year to the end of March from
a £111 million profit in 2019.
Amigo shares closed at just
over 7¼p, down 8.5 per cent.