Major Discrepancy In Australian Fund Transfers

watchdogs in Australia’s finance

Vatican Seeks Clarification And Review

Major watchdogs in Australia’s finance have dramatically reduced the sum of money it was sent from the Vatican to Australia. This was according to the Vatican after an earlier report cited a huge figure that raised suspicions of money laundering.

As per the joint Vatican-Australian review showed only $9.5 million was transited between 2014 and 2020, a fraction of $2.3 billion originally reported by the watchdog which sparked surprise.

The Vatican contested the huge figures in December and asked the Australian financial intelligence unit, known as AUSTRAC, to review its calculations.

With that, some media raised speculations that the Vatican could have been used to launder money.

This error by AUSTRAC was first reported by The Australian newspaper, which explained it was due to a computer coding mistake.

Meanwhile, the Vatican statement called the mistake “a huge discrepancy”. It said the $9.5 million sent to Australia was mostly to meet “contractual obligations” as well as “ordinary management”. This seemed to be a reference to its embassy in Australia.

As per the Vatican, the original report of the staggering amount of money and more than 47,000 individual fund transfers had appeared to be like “science fiction”, provided that fact that the Holy See’s annual budget is about 330 million euros. Hence, they demanded a review.

AUSTRAC had told the Australian newspaper the new calculations showed there had been only 362 transfers in that period.

Amid that, Vatican’s treasurer from 2014 to 2017, Cardinal George Pell, told media “I was relieved to hear that billions were not laundered through the Vatican while I was head of the Secretariat for the Economy”.

Last month, Archbishop Mark Coleridge of Brisbane said that the Australian Church was not made aware of such transfers and that the bishops yearn for an explanation from the Vatican and AUSTRAC regarding the matter.

(Image source: Yahoo)

‘I think there’s hope’: New Ontario finance minister Peter Bethlenfalvy to focus on economic recovery post-pandemic


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Ontario was leading the country in job creation before the pandemic, he said, adding that “we’re going to continue (on) that path… in a laser-focused way.”

He acknowledged that renewed and extended lockdowns — now province-wide for all non-essential businesses — are painful for the affected firms. But he said the province has been taking advice from public health and medical experts when making such decisions, and is providing millions of dollars in support to businesses including grants and relief on property taxes and energy bills as a “bridge to the other side” of the pandemic.

Ontario Premier Doug Ford and former finance minister Rod Phillips arrive to deliver the 2020 Fiscal Update at Queen’s Park in Toronto on Wednesday March 25, 2020. Photo by Frank Gunn /THE CANADIAN PRESS

“Our decisions are very much driven by the health and safety and the guidance that we’re getting from the experts,” he said, adding that his government is also “very mindful of the difficult environment that many families and workers and businesses across the province have to face.”

He said he believes businesses and workers in the province will prove to be “resilient” as his government unfurls more than $15 billion in supports over the next three years, as announced in November’s budget.

Bethlenfalvy added that the rollout of COVID-19 vaccines — though criticized by some as being too slow as cases, hospitalizations and deaths continue to climb — should provide a “no pun intended, shot in the arm” to public health and ultimately the economy.

“I’m very optimistic about not only the rollout but getting this economy back on its feet and stronger than before, both from a health point of view and from a business point of view — those things are linked,” he said. “I think there’s hope.”

Thank you for stopping by and reading this news release regarding Canadian and Political news published as “‘I think there’s hope’: New Ontario finance minister Peter Bethlenfalvy to focus on economic recovery post-pandemic”. This news article is presented by My Local Pages as part of our local news services.

#hope #Ontario #finance #minister #Peter #Bethlenfalvy #focus #economic #recovery #postpandemic



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Trading pick of the week: Cholamandalam Investment and Finance Company (₹411.6): Buy


The stock of Cholamandalam Investment and Finance Company jumped 6 per cent, accompanied by above average volume on Friday, conclusively breaking above a key resistance level of ₹390. This rally has strengthened the primary trend that is up and provides investors with a medium-term perspective, an opportunity to buy the stock at current levels.

The stock had encountered a crucial resistance at ₹350 in February 2020 and fell sharply until it found support at around ₹120 in early April. After testing the key support at ₹120 in late May, the stock reversed direction, triggered by positive divergence on the weekly relative strength index and continued to trend upwards. In mid-June, the stock broke out of the double-bottom pattern neckline at ₹180, which is a bullish reversal pattern, and extended the up-move.

Since May, the stock has been on an intermediate-term uptrend forming higher highs and higher lows. The stock’s uptrend accelerated in November that had helped it to conclusively break above the vital long-term barrier at ₹350.

Following a corrective sideways move, the stock appears to have resumed the intermediate-term uptrend in the past week in which it had surged 9 per cent. The stock trades well above the 21- and 50-day moving averages. The daily relative strength index has re-entered the bullish zone recently and the weekly RSI continues to feature in the bullish zone.

Besides, the daily as well as weekly price rate of change indicators hovers in the positive terrain, implying buying interest. Overall, the medium-term outlook is bullish for the stock. It can extend the uptrend and reach the price targets of ₹450 and ₹480 with a minor pause at around ₹450. Investors can buy the stock with a stop-loss at ₹370.



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Ontario finance minister says pandemic vacation was ‘dumb, dumb mistake,’ hopes Ford won’t fire him


TORONTO —
Ontario finance minister Rod Phillips sheepishly apologized at Pearson airport on Thursday morning, two days after it was revealed he quietly departed for a vacation on a luxurious Caribbean island while the COVID-19 pandemic surged across Ontario.

The Ajax MPP left for St. Barts, a tiny, 10,000-inhabitant island known as a hideaway for yachts and boutique luxury hotels, on Dec. 13, calling the decision a “dumb, dumb mistake.”

“It was a significant error in judgment – a dumb, dumb mistake, I apologize for it, I regret it,” he told CP24’s Steve Ryan at the terminal.

He said that he could not really explain why he went ahead with the trip at the time that he did.

“I have been asking myself the same thing over the last number of days,” he said.

His office released a plethora of tweets and Instagram posts during the time he was away, including one where he sat next to a gingerbread house and thanked healthcare workers dealing with packed hospitals, as “we all make sacrifices this Christmas.”

Many of the posts made it appear as if he was in his riding when he was not.

Phillips said it was not his intention to deceive anyone about the trip when he sent the videos, tweets and Instagram posts.

“I understand why some people believe that is the case but it is not – many politicians, in fact most politicians pre-plan and pre-load messages on social media,” he said.

But he said the messages may have made it look that way given where he was and he knows the public is upset.

“I do understand that I have angered many people – I have to work to regain their confidence.”

In a Zoom call Phillips participated in while he was away, first pointed out by the Ontario Liberal Party, the sound of the ocean tide crashing into the beach can be heard when he unmuted himself to speak.

Ontario’s two top public health officials both expressed concerns about foreign travel at the time he departed for the vacation.

The federal government has also been warning Canadians not to embark on non-essential travel since early November.

Ontario Premier Ford said Wednesday he wasn’t told about the trip ahead of time, but did learn about it shortly after it began, and should have demanded Phillips return immediately.

Phillips said that he didn’t tell Ford about the trip because the Premier has better things to do.

“Premier Ford has far more important things to do than worry about the travel of his ministers,” he said.

Ford has said it’s “unacceptable” for any public official to ignore the province’s COVID-19 guidelines, which urge residents to avoid non-essential travel.

Phillips said earlier this week he chose to go ahead with the trip not knowing the province would be placed under lockdown on Boxing Day.

Ontario opposition leader Andrea Horwath has called for Phillips to be removed from caucus.

Ford has said he and Phillips, who must now self-isolate until Jan. 13, will have a “very tough conversation,” about what has occurred.

Phillips said he wants to remain in cabinet, but he understands his error may mean he has to leave.

“I still think that there is a lot of work to be done in the province, but that is one of the things I will talk to the premier about today.”



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Ontario finance minister on holiday trip outside Canada as health officials urge people to stay home


Ontario Finance Minister Rod Phillips travelled outside of the country for a personal vacation recently, his office said Tuesday.

The trip was taken after the legislative session ended earlier this month, Phillips said in a statement on Tuesday, adding that it was “previously planned.”

“Immediately following the end of the Legislative Session, which occurred on December 8th, my wife and I departed on a previously planned personal trip outside of the country,” Phillips wrote in the four-paragraph statement.

“Had I been aware then of the eventual December 26th provincewide shutdown, we would have cancelled the trip.

“I have continued my work daily as the Minister of Finance and MPP for Ajax including dozens of digital ministry, constituency and cabinet committee calls and meetings.

“We will continue to observe public health directives, including the 14-day quarantine,” Phillips added.

Phillips still out of the country

His office has told CBC News that Phillips left for the trip on Dec. 13 and is still out of the country, adding that he will be in quarantine after his return.

Meanwhile, Emily Hogeveen, senior communications adviser and press secretary in the minister’s office, clarified a Dec. 15 tweet on the minister’s account, which appeared to suggest he was in Durham Region on that date.

In the tweet, Phillips said it was a pleasure to join his colleagues and “some of Durham’s mental health leaders” in announcing more than $1.6 million in funding to support mental health and addiction services expansion in Durham.

But Hogeveen said the photo was taken previously and posted to accompany the news of mental health funding for Durham, as it depicts the Durham MPPs. 

“The minister has made no public appearances or outings,” Hogeveen wrote in an email to CBC News.

At a news conference on Tuesday afternoon, Ontario’s associate chief medical officer of health, Dr. Barbara Yaffe, said the public health advice has been and continues to be not to travel outside of the country unless it’s absolutely essential.

WATCH | Ontario public health official comments on finance minister’s trip:

Ontario’s associate chief medical officer of health, Dr. Barbara Yaffe, reacts to news that the province’s finance minister Rod Phillips travelled outside of Canada as officials urge people to stay home. 1:12

We all make sacrifices, Phillips tweets

Phillips has faced backlash on his Twitter account, which has been active over the period he’s been out of the country.

On Christmas Eve, he tweeted: “As we all make sacrifices this #Christmas, remember that some of our fellow citizens won’t even be home for Christmas dinner over Zoom.

Also on Dec. 24, Phillips tweeted a video in which he’s seen sitting by a fireplace. In the video, he thanked people for what they are doing to protect the most vulnerable.

Phillips can’t be allowed free pass: NDP 

In a statement Tuesday, NDP deputy leader Sara Singh said Premier Doug Ford cannot give Phillips a free pass for his choice to leave the country to vacation in December, while instructing everyone else to stay home.

“Doug Ford let Sam Oosterhoff off the hook when he held a big family shindig. Ford let himself off the hook for gathering with family when he told the rest of us we can’t,”  Singh wrote in the statement. “These guys just think the rules don’t apply to them.”

She said many “everyday folks” were separated from family and aging parents during the holidays. 

“They’ve missed the birthdays and graduations of people who are precious to them, and they have been separated from nieces, nephews and grandbabies as they’ve grown and hit new milestones over the last year.

“While the rest of us ache to hug our loved ones again, Doug Ford insiders are whooping it up, even vacationing in the tropics,” Singh wrote.

Ontario NDP deputy leader Sara Singh says Premier Doug Ford cannot give Phillips a free pass for his choice to leave the country for a vacation in December. (CBC)

Singh’s statement referred to Niagara MPP Sam Oosterhoff, who faced backlash in October for posting a photo to social media of himself with a large group of people at a banquet hall where nobody wore a mask.

Oosterhoff apologized, and Ford accepted that, saying he still had “100 per cent confidence” in his MPP.

The statement also referred to Ford’s admission in May that two of his daughters who live in different households visited his home over Mother’s Day weekend, contrary to the province’s COVID-19 rules at the time.

CBC News has not independently confirmed where Phillips is vacationing.

When asked where Phillips was, Hogeveen replied: “I cannot comment on that.”

Warning against non-essential travel

On Tuesday, the Public Health Agency of Canada advised people against non-essential travel and reminded all travellers returning to Canada that contravening the mandatory quarantine can lead to severe penalties.

The agency said restrictions are changing quickly and may be imposed by countries with little warning.

“Those who choose to travel may be forced to remain outside of Canada longer than expected,” the agency said in a news release.

Travel restrictions and border measures have been in place in Canada since March.





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Shinzo Abe Aide Faces Fine Over Campaign Finance Allegations in Japan


TOKYO — Prime Minister Yoshihide Suga of Japan apologized on Thursday for what he said were unintentionally false statements about a political spending scandal that has tarred the first months of his administration.

The apology came hours after Japanese prosecutors said they would seek to fine an aide to Shinzo Abe, the former prime minister, over alleged violations of political spending rules.

Prosecutors said Mr. Abe himself will not be charged in connection with the matter, an unusual statement that appeared to be aimed at quelling media speculation about his fate.

Mr. Suga, who succeeded Mr. Abe as prime minister in September, has not been accused of wrongdoing. Still, Mr. Suga spent Mr. Abe’s nearly eight years in office as his top spokesman and political fixer, defending him to the press and in Japan’s Parliament against accusations of wrongdoing.

The residue of Mr. Abe’s scandal — involving several alleged violations of the country’s election and political financing laws — has tarnished Mr. Suga’s administration, which is already reeling from public anger over its handling of the coronavirus. The prime minister’s poll numbers have dropped precipitously from a high of around 65 percent when he took office to 39 percent in a poll by The Asahi Shimbun, a daily newspaper, taken last weekend.

Prosecutors are calling for Hiroyuki Haikawa, a 61-year-old former aide to Mr. Abe, to be punished under an abbreviated legal process reserved for relatively minor infractions liable for fines under about $10,000. The announcement effectively ensures that the accusations will never be aired in a public court hearing.

Mr. Haikawa stands accused of underreporting by hundreds of thousands of dollars the true amount paid using campaign funds for banquets for Mr. Abe’s political supporters. The dinners were held over a period of four years at a luxury hotel in Tokyo ahead of an annual cherry blossom viewing party hosted by the prime minister.

Mr. Abe and Mr. Suga have both consistently denied any wrongdoing. But following the prosecutors’s announcement, both men found themselves apologizing for making false statements to Parliament, saying that they had unintentionally misrepresented the facts surrounding the scandal.

Speaking to reporters Thursday evening, a pale and trembling Mr. Suga said that in the process of defending Mr. Abe he had responded to questions from Parliament with “replies that differed from the facts. In regards to this, I express my deepest apologies to the nation.”

In comments echoing Mr. Suga’s, Mr. Abe apologized for previous statements about the scandal, which he said “were contrary to the truth,” but added that he had not been informed about the underreporting and that the inaccuracies were unintentional.

The amounts involved in the accusations against Mr. Haikawa might seem small by the standards of political corruption in other countries, but they were big news in Japan, where politicians have been booted out of office for seemingly minor violations of campaign finance rules, such as giving away potatoes.

The cherry blossom viewing party, which has been hosted by Japan’s prime ministers since the 1950s and is paid for with public funds, became the center of a major public scandal late last year when it was revealed that Mr. Abe and his allies had invited thousands of political supporters to attend over the years. Mr. Suga helped set the guest lists for the events.

The issue gained steam after officials revealed that they had shredded the proposed guest list for this year’s party after opposition lawmakers requested to see it. Demands for an inquiry followed, and the affair continued to haunt Mr. Abe until he resigned from office in September, citing health issues.

In a statement, prosecutors said that they would not pursue charges against Mr. Abe in relation to the banquets or cherry blossom viewing party because of lack of evidence.

Local media widely reported that Mr. Abe had submitted to voluntary questioning by prosecutors about the issue on Monday.

On Twitter, users pilloried the prosecutor’s decision to forego charges against Mr. Abe. Tweets demanding that authorities press charges trended on Thursday morning, accompanied by the hashtag “#abenomics,” a play on the name of the former prime minister’s economic revitalization campaign. Koichi Nakano, a professor of political science at Sophia University and a vocal critic of the former leader, said his Christmas wish was for Santa Claus to imprison Mr. Abe in the North Pole.

The indignation reflected widespread frustration with Mr. Abe, who had weathered several influence-peddling scandals during his time as the country’s longest serving prime minister — a record that he achieved on the back of strong economic growth, in part through his reform efforts and his skillful handling of President Trump.

Most famously, he was accused of the improper sale of public land at steeply discounted prices to a political ally. A government functionary caught up in the scandal committed suicide.

The scandals were never conclusively linked to the former leader, who has denied any wrongdoing, but they fueled surging public anger that nearly cost Mr. Abe his job.

His reputation had also been tarnished by his allies’ run-ins with the law. Earlier this year, Anri Kawai, one of his political protégés and the wife of a former minister of justice in his cabinet, was charged with buying votes to win election to the upper house of Parliament. She is currently on trial in Tokyo, where she has plead not guilty to the charges.

Makiko Inoue and Hikari Hida contributed reporting.



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‘Disappointed’ ANZ loses finance boss to Transurban


Transurban CEO Scott Charlton said the company was “delighted” by the appointment. “I believe that with her leadership, capabilities and experience she will make a significant contribution to the Transurban business,” he said.

Ms Jablko said the move was an “incredibly tough decision” but she was looking forward to putting her experience to use in a new industry.

“I’ve thoroughly enjoyed working with Shayne and the broader team as well as playing a role in the bank’s continued success,” she said in a statement.

“I’m particularly proud of the work we have done to strengthen and simplify the bank as well as the highly capable finance function we have built over the last few years. I know the team will continue to do a great job for ANZ’s shareholders and customers.”

Mr Elliott praised Ms Jablko for transforming the bank’s finance function and being instrumental in the “simplification and strengthening of the organisation”.



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Three things you need to know about finance as a freelancer or sole trader


If you’re transitioning from being an
employee to a freelancer or small business owner, it can be tempting to put off
certain financial matters.

I did, but it only brought a world of
overwhelm later on. Now that I know what I know, I’m keen to share three tips
that can help set the financial foundations.

Your
pricing should reflect your value

Figuring out what to price your products or services can be a mind-bending experience. Whatever your specialty, there are three common things people often forget to factor into their pricing – annual leave, sick leave, and superannuation.

Without accounting for leave from your
business, you have no buffer for taking time off. As a result, you put yourself
on the fast track to burnout. Furthermore, if you don’t make superannuation
contributions and save for your retirement, you’re putting your future
financial security in peril.

Factoring these three things into your
pricing means that the true value of your work is reflected in what your
customers pay. If a customer requests a discount, take a pause and think about
what it means for your future. It’s likely to result in less time off in the
short-term, and less money to live your best life in retirement in the
long-term.

Separate
business and personal (at the bank)

When many people enter into the world of
self-employment, they often end up using their personal bank account for their
business. However, as the business grows, this becomes more problematic.

When you look at your bank balance it can
be hard to visualise your business cash flow and expenses in relation to
whatever amount is available for you to spend. Our brains have trouble
separating one dollar from the next, so when you look at one big sum you might
see a nice overseas holiday instead of your tax bill, GST, and superannuation.

Setting up a separate business account
for all of your business transactions makes it much easier to see if you really

can afford that trip to Bali once tax, GST and superannuation have been paid.

Superannuation
is about being smart with your business (and personal) finances every year

For employees, superannuation is part of a “set and forget” mindset. Their employers handle super and it gradually grows bigger without the employee having any major input. Freelancers and sole traders don’t have this luxury as superannuation becomes their direct responsibility. Thus, too many retire with just half the superannuation of their employee friends.

First of all, if your income is below a certain threshold and you make a contribution to your super, the government will match up to half of your contribution. For the 2020/21 financial year, if your taxable income is below $39,837 the government will make a co-contribution up to a maximum of $500.

In other words, if you contribute $1000 to your super, the government will give you $500. If you earn between $39,837 and $54,837 the government will also top up your fund, but the maximum benefit reduces as your income rises.

The other way super contributions can work to your advantage if you’re a sole trader is to reduce your taxable income by claiming your super contributions as a tax deduction. Doing this will mean that your superannuation contributions will be taxed at 15 per cent, instead of the rate relevant to your income bracket – potentially saving you some serious dollars.

To do this, you’ll have to fill out an “intent to claim” with your super fund – and this can be a painful process unless it’s automated to the extent our system is – where all you have to do is check a box.

Self-employment is a juggling act, but if
you follow these tips your future self will thank you.

Branka Injac Misic, Co-founder, GigSuper





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Brazilian finance minister to stay until end of Bolsonaro administration, president says


FILE PHOTO: Brazil’s Economy Minister Paulo Guedes attends a seminar on the resumption of the Brazilian economy, in Brasilia, Brazil, December 8, 2020. REUTERS/Ueslei Marcelino

December 19, 2020

RIO DE JANEIRO (Reuters) – Brazil president Jair Bolsonaro said in a video published on Saturday that his finance minister Paulo Guedes assured him he will stay on in the government until the end of his administration.

Bolsonaro acknowledged in the video that Guedes is unhappy because of the difficulties experienced in implementing his economic agenda, which involve significant cuts in public spending and a tax reform long-awaited in financial circles.

“It’s logical that we see that once in a while he becomes irritated because certain measures require a (congressional) vote,” Bolsonaro said of Guedes. “I know how parliament works, but he’s still learning.”.

Guedes was in the private sector before joining Bolsonaro and is a cofounder of investment bank BTG Pactual. He advised Bolsonaro on economic matters in his 2018 presidential run and has been finance minister since he assumed the presidency on Jan. 1, 2019 for a four-year term.

(Reporting by Pedro Fonseca; editing by Grant McCool)





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Financial Conduct Authority slammed by investigation into its failures to spot London Capital & Finance scandal


T

he Financial Conduct Authority was today slammed by an independent investigation into its behaviour on the London Capital & Finance scandal, which has put thousands of pensioners at risk of losing £236 million.

Judge Dame Gloster’s report into the regulator, which was then run by now-Bank of England governor Andrew Bailey, found it repeatedly failed those who bought the bonds by repeatedly missing red flags that should have alerted them to major problems with the firm.

Victims of LCF’s collapse, the report says: “whatever their individual personal circumstances, were entitled to expect, and receive, more protection from the regulatory regime”.

It accused the FCA of failing to regulate LCF properly due to “significant gaps and weaknesses” in its policies.

The FCA was, the report said, “unduly limited” in the scope of its duties, known as the Perimeter, in regulatory jargon.

This meant it paid too little attention to elements of LCF’s business which were not technically regulated. So, when it received an anonymous letter warning it of allegations of fraud and other irregularities, it failed to investigate further, assuming it to be a police matter.

Call handlers at the FCA receiving allegations of fraud as early as 2016 regularly failed to refer them to the supervision division. On one day, in July 2016, they received three calls but none were referred on.

“The FCA’s flawed approach to the Perimeter resulted in LCF being able to use its FCA-regulated status to present an unjustified imprimatur of respectability to the market, even in relation to its non-regulated bond business,” the report states.

The FCA also failed to consider LCF’s operations as a whole, looking at individual breaches but failing to put them together into a bigger picture of danger. Regular breaches of financial promotions rules were never referred up the chain for a holistic review of the business.

FCA staff taksed with reviewing LCF’s paperwork had not been trained sufficiently to spot indicators of fraud or other serious irregularity, the report says.

One had no accountancy or other relevant qualifications, saying his learning had been “on the job”.

Another told the investigators: “I don’t believe…that there is much training around how to identify financial crime.”

The FCA failed to spot an “ever growing number” of red flags indicating serious irregularities.

The LCF case is now being investigated by numerous agencies including the Serious Fraud Office, who have requested certain redactions into her 500 page report.

The report says Andrew Bailey had attempted to stop the report blaming individuals’ failings at the FCA, particularly if they were to be personally identifiable. 

Other FCA officials said effective naming and shaming would put other people off taking difficult jobs at the organisation in future.

The FCA also said the report was not fair as it was supposed to examine “lessons learned” rather than individual failures. Gloster refuted all those requests and claims.

Many of the 11,000 people who lost money to LCF did so after seeing advertising online which were misleading, particularly around the description of the underlying investments, which were a tiny number of companies associated with the directors of LCF and those close to them.

Gloster found the FCA had no reason not to intervene as its brief under the law which says promotions must be “fair, clear and not misleading.”

The FCA should also have been alive to the fact that the risks LCF must have been carrying out with bondholders’ money was high because of the exorbitant interest rates it was offering them.

The report was deeply critical of the FCA’s register of approved and regulated people, because LCF appeared on it even though it was only partly regulated.

“LCF’s appearance on the Register encouraged investors’ belief that LCF had a badge of respectability… including in respect of its unregulated bond business.”

It said the FCA had to take far greater efforts to alert its staff of its important role combating fraud.

The FCA finally intervened in December 2018 but “should have intervened much earlier.”

In the event, Gloster said, its intelligence team “stumbled across” possible irregularities in an unrelated search on an external intelligence database on 15 October.

“If the report didn’t mention LCF, it’s entirely possible that nobody would have looked at it,” the staff member told Gloster’s team.

When the FCA finally raided LCF’s offices, it did not consider asset freezes or other actions against connected persons “given the risk of dissipation of assets,” the report says.

The FCA responded to Gloster’s inquiry that it was short of resources and had to prioritise, but the report says that does not negate the failure to act on the “extreme case” of LCF and the numerous red flags.

Gloster set out four recommendations, which the FCA has accepted.

1) Order staff authorising and supervising firms to view them holistically 

2) Make sure contact centre staff refer fraud allegations to the Supervisory Division, even when the allegations are against the non-regulated activities of a firm

3)Train supervisory and authorisation staff how to spot potential fraud or other serious irregularities

4) Make sure staff are aware of the risks of business models such as minibonds

5) Have clear policies on how to respond to repeated breaches

6) Create a culture of combating fraud by authorised firms

7)Make sure IT systems at the FCA collate all information so red flags can be centrally viewed and a broader picture built of a firm

8)Ensure its supervision programme relating to flexible firms is operating effectively

9)Consider improving the FCA’s use of market intelligence.

Gloster also recommended the Treasury review the scope of the FCA’s remit and review the way it works with HMRC and other government bodies.

In March 2017, a seemingly well informed reader wrote the following to the FCA: “[LCF]

is claiming to charge small businesses 10-20% interest

on loans, and offers up to 8% interest for 3 year bonds

of a minimum of £5000. I feel that this has to be a

scam. I checked the FCA register and the company has

been registered since July last year – a big red flag in

my opinion that they are such a new company. They

are not covered by the FSCS and do not adhere to antimoney laundering regulations. They claim to offer

asset backed securities that will give people the

impression that the ‘bonds’ they are buying are safe

investments, yet a quick look at the risks they state at

the bottom of their page reveal these are highly risky

investments with no guarantees, no assets (or at least

quality ones) to back them up so far as I can tell. My

guess is that they will take peoples money and will go

out of business before the bonds are redeemable. In

addition, they also claim to have a ‘withholding tax’

on the interest paid of 20%, which also speaks for

itself. There are red flags all over their literature”

Another wrote: ““[t]headvert has no mention that capital is at risk and makes

it seem like this is a deposit account. It isn’t, it’s a loan

to the company when the investor could lose all their

money. There is nothing to indicate that to the

viewer”

In January 2017, another wrote:

“Re.London Capital and Finance Group

I wrote a few back regarding the above company. Just by way of

an update. They have raised £30m now and as far as I can see

they have just “lent” the money to related companies controlled

by the main players… [the letter then lists two individuals,

neither of whom were obviously connected to LCF (i.e. they

were not LCF’s Approved Persons)].

[The letter then includes a sentence alleging that one of the

individuals had been making lavish purchases.]

They trade on the fact that they are FCA regulated well they have

a consumer credit license, they are not authorised for investment

purposes or dealing with the general public re investment… the

product is being heavily mis sold […]

I have copied in [an FCA employee in the Unauthorised Business

Department] at the FCA too… hopefully between you things will

This letter was not acted upon because the FCA failed to make the connection between LCF and “London Capital and Finance Group”, as the correspondent described the company.

Dame Gloster adds that the FCA could not establish whether it did or did not receive a now-famous letter warning the FCA of LCF’s red flag behaviour by IFA Neil Liversidge. She concluded that it did receive the email, but its complaints procedures were in such disarray that it would not have acted on it anyway.



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