FCA fines and bans former Director of London Capital & Finance plc over financial promotion failings
On 13th February 2024, FCA published a final notice against former director of London Capital & Finance plc (LCF), Floris Jakobus Huisamen, for recklessly signing off hundred of financial promotions which contributed to thousands of investors being misled.
London Capital & Finance plc were at the centre of the mini-bond scandal in 2019/20. LCF issued unfair and misleading financial promotions to induce thousands of investors to invest millions of pounds which were lost when the firm collapsed in 2019. The FCA censured London Capital & Finance plc in October 2023 however this most recent final notice deals specifically with the individual responsible for compliance at LCF.
Mr Huisamen, former CF1 Director and CF10 Compliance Oversight controlled function holder at LCF has been fined £31,800 and banned from working in financial services. This case should be viewed as a cautionary tale and essential reading for any firm (and individual) involved in marketing activity.
The final notice provides a detailed breakdown of action and inaction, and how this led to failings and harms but, in summary, Mr Huisamen “failed to act with integrity in the verification and approval of the LCF financial promotions, which directly resulted in the misleading, unfair, and unclear financial promotions”.
Key points to highlight from the notice include:
Mr Huisamen recklessly signed off LCF’s financial promotions (including the Information Memoranda, website(s), emails and social media) as compliant with the financial promotion rules, despite being aware of clear risks that they were not compliant.
Mr Huisamen did not review documentary evidence to support representations made in the financial promotions and relied on the word of LCF’s senior management and accepted the wording in the financial promotion as it was, without applying appropriate scrutiny.
The approval process, which Mr Huisamen was instrumental in developing, was “nothing more than a simple and ineffective tick-box exercise which was not in any way tailored to the business of LCF and which was incapable of identifying unfair, unclear or misleading statements within the promotions”.
Considering the notice, it is clear that firms and individuals who:
Cannot identify all promotional activity undertaken;
Fail to implement controls (or use a tick box approach) for ALL promotions
Fail to ensure a robust sign off processes is in place, which includes ensuring adequate supporting evidence is one file to verify claims made
Accept claims made by others at face value (including by senior management) and fail to demonstrate sufficient independent challenge or scrutiny
Do not consider FCA’s high level requirements (including consumer duty) of being fair, clear and not misleading in their judgements when designing, approving and issuing promotions
...will be falling short of the basic requirements expected of an authorised firm, and relevant individuals could face fines and bans from the industry.
If you have any questions regarding this case or your firm’s financial promotion controls as a result, please get in touch.