Is the 8% return on your 'savings' really just a complex fraud?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 5 April 2019

⏱️ 39 minutes

🔗️ Recording | iTunes | RSS

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Summary

As we fast approach one fifth of the way through the 21st century, the world of finance is modernising in ways that would have been unimaginable a few years ago. And not always in a good way.

The language of ‘savings’ has evolved to the point of dishonesty and even fraud.

On this week’s podcast editor Simon Lambert and reporter George Nixon join host Georgie Frost to look at fancy new Innovative Finance Isas, at savings products that claim to offer 8% returns and to be protected by the official savings watchdog but are in fact risky investments – and the fraud investigation at London Capital and Finance, where thousands of ‘savers’ lost millions of pounds.

Simon guides listeners through the dark side of mini bonds and the complex web of companies that savers’ money was poured into at LC and F before it collapsed owing £236m. The City watchdog supposedly overseeing the company is also now being investigated .

On a cheerier note, George explains how teenagers are able to invest on the stock market and how easy it can be to get started, plus a couple of new free share dealing services, an old-fashioned holiday trap and whether insurance companies would pay out if your flash car crash is on video and on social media.

Enjoy.

Transcript

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0:00.0	Welcome to This Is Money in partnership with NS&I. I'm your host, Georgie Frost, and alongside editor Simon Lambert and I today is reporter George Nixon.
0:10.6	And coming up, more lapdog than watchdog. A criminal investigation is underway following the collapse of London capital and finance, with many questions being asked, including of the city regulator itself.
0:22.2	Simon explains all, including what is an innovative ICER, and why is it risky?
0:26.9	Also today, George argues for young workers to get started investing, but 16.
0:32.2	We look at when it doesn't pay to book early and whether insurers will pay out when bad driving goes viral.
0:39.6	Don't forget you step to date with all the latest breaking money news. Just go to this ismoney.com.
0:43.3	UK or download the app.
0:46.0	This is Money. Brought to you in partnership with NS and I, giving your little ones a head start
0:51.6	with our junior ISA. But first, the city regulator is itself to be investigated by the Treasury following the collapse of London Capital and Finance last month.
1:01.1	Now, did the Financial Conduct Authority do enough to protect the almost 12,000 customers who'd invested 236 million in LCF. There are fears they may only recover around 20%
1:14.1	of that. But this case throws up all sorts of issues, not just the conduct of those at LCF and the
1:18.9	FCA, but about regulated companies selling unregulated products, the marketing of them to the
1:24.3	public, that maybe just don't get the intricacies. So, a warm welcome
1:29.2	to you both. Simon, remind us what happened. Who are LC&F? Well, London Capital and Finance
1:37.1	were a company that set up offering savers returns of about 8%.
1:45.2	And the idea was that you would invest with this company,
1:49.6	then your money would be lent out to small businesses.
1:53.3	And it would be using something called mini bonds.
1:56.6	Mini bonds are so called because they are a bond, an I owe you, where you are lending a company money
2:02.7	and it pledges to repay you your capital and some interest.
2:06.9	And mini bonds to differentiate them from something called retail bonds,
2:13.0	which are a bond that is traded on the order of retail bonds index run by the London Stock Exchange.
	...

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