Britain to crack down on online fraud after LCF collapse

Huw Jones
·2-min read
John Glen, local Member of Parliament for Salisbury and South Wiltshire, talks to the media in Salisbury

By Huw Jones

LONDON (Reuters) - Britain will crack down on online scams and make platforms that make money from advertising financial products more accountable, financial services minister John Glen said on Wednesday.

A report into the collapse of London Capital & Finance investment firm recommended that the government should consider including financial fraud in its proposed law on online safety.

LCF was authorised by the Financial Conduct Authority but the mini-bonds it sold online were unregulated.

The government said on Monday it would pay up to 120 million pounds in compensation to many of the 11,600 investors who lost up to 237 million pounds when the fund collapsed in early 2019. The Serious Fraud Office is investigating the collapse.

Scrutiny ahead of the proposed online law will give the finance ministry an opportunity to see if financial fraud could be fitted into it, Glen told a hearing of parliament's Treasury Select Committee on the report into LCF's collapse.

The report exposed the challenge that so many financial services products are marketed online, Glen said.

The safety bill will introduce new rules to make companies based anywhere in the world take responsibility for the safety of their online users in Britain from harm like child sexual exploitation, terrorism, hate crime and sale of illegal weapons and drugs.

"We have got to deal effectively with fraud and it seems to me that the online safety bill is an area which may provide that vehicle," Glen said.

"If it's not, then we will need to find another way to deal with this really important challenge, that we can't let go by."

The ministry is also working on what responsibilities online platforms taking advertisements for financial products should have, he said. It has met with online and tech companies to see what gaps need filling.

The LCF report blamed the FCA's CEO and executive committee for failing to supervise LCF properly. Three executive members were named, but two have already left and the third, Megan Butler, remains in a different role.

Glen repeatedly declined to say whether it was right that Butler remains in a senior role, saying she was still "significantly respected" by many at the watchdog, and that he would not interfere in operational matters.

(Reporting by Huw Jones; Editing by Nick Macfie)