I beg to move amendment 1, page 1, line 18, at end insert—
“(5) Within six months of this Act coming into force, the Secretary of State must lay before Parliament a report that assesses the impact of the payment of compensation to the customers of London Capital & Finance plc under this section, and in the light of that assessment, sets out the following—
(a) an assessment of the regulatory failures that gave rise to the need to compensate the customers of London Capital & Finance plc;
(b) measures the Government is taking to prevent such regulatory failures in the future;
(c) the reasons why the Government is providing compensation to the customers of London Capital & Finance plc but not the customers of other failed investment firms;
(d) criteria for when the Government should be expected to provide compensation following the collapse of investment firms; and
(e) the reasons for the capping of compensation payments under this section at 80% of what customers of London Capital & Finance would have been entitled to under the Financial Services Compensation Scheme.”
This amendment would require the Secretary of State to lay a report before Parliament that assesses the impact of the Government compensating the customers of London Capital & Finance plc, as well as broader issues relevant to the mis-selling scandal.
It is a pleasure to open this afternoon’s debate and to speak in favour of amendment 1, which is in my name. My amendment would require the Secretary of State to report back to Parliament within six months of the Bill coming into force, with an assessment of the impact of the payment of compensation to customers of LCF. Crucially, it would require the Secretary of State in that report to give an assessment of: the regulatory failures that made the London Capital & Finance compensation scheme necessary; the measures that the Government are taking to prevent such regulatory failures; the reasons why victims of other failed investment schemes, of which there are many, are not being compensated; the criteria for when the Government should be expected to provide compensation following the collapse of investment firms; and, finally, the reasons for the capping of compensation payments under this scheme at 80% of what customers of London Capital & Finance would have been entitled to under the Financial Services Compensation Scheme.
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The amendment does not seek to change the actual scheme at all, and we will support the Bill on Third Reading as we have supported it at other stages, but it does seek to address the single biggest problem with the Bill, which is that it does not go nearly far enough. The amendment echoes amendment 7 in Committee and its intention is similar to amendment 1 in Committee, which was tabled by the Opposition Front Bench. Neither of those amendments was pushed to a vote in Committee, but
both raised issues of significant importance to thousands of people, who between them have almost certainly lost more than £1 billion through investment scams and whose plight the Bill currently fails to address.
My amendment will not bring the investors justice, because the Bill was drafted in such a way that an amendment that sought to bring justice for them would have been inadmissible, but it would offer the first small step towards recognising that the £1 billion scandal of pension investment mis-selling and the catalogue of regulatory failures that allowed that scandal to continue for so long have left thousands of hard-working people potentially destitute because their retirement plans have been stolen from them. The Government have yet to offer a credible reason for rejecting my amendment, so, given the importance of the issues that it seeks to address, I do intend to test the will of the House on this question at the end of the debate.
There has been virtually no opposition to the Bill from MPs or those who have given evidence to the Bill Committee. There has, however, been strong criticism across the board about what the Bill does not do—that is, it does not do nearly enough. It places no obligation on anyone to sort out the mess created not only by London Capital & Finance, but by other scams—such as Premier FX, Blackmore Bond, Henley, Connaught and many others—that were allowed to happen. It does nothing to explain how Companies House, the Financial Conduct Authority, company auditors and in some cases the police either did not have the powers they needed, or in some cases failed miserably to use the powers they had, to prevent these scams from happening and to protect innocent, unsuspecting investors.
In my earlier contributions on the Bill, I have made frequent references to the collapse of Blackmore Bond for the likely loss of £46 million of other people’s pension funds. I will not repeat everything that I have said before, but for the benefit of Members who have not had a chance to catch up with the full proceedings, let me just say that the similarities between London Capital & Finance and Blackmore Bond are many and they are striking. According to Library reports, the owners and directors of the entire Blackmore Bond group of companies made about £800,000 signing up investors for LCF. Blackmore Bond then used Surge Financial—a company that is now under criminal investigation as part of the fallout of the LCF investigation—to drum up leads for its mis-selling of mini bonds.
In previous stages, the Government have claimed that the exact details of London Capital & Finance’s mis-selling and ultimate collapse were unique, and that that is why there is a compensation scheme for its victims but not for the victims of other schemes.