Bank of England governor Andrew Bailey has apologised for his role in the demise of London Capital & Finance, the investment firm that collapsed owing customers almost £240m.
OK, LCF, 8% returns on minibonds, it goes bust, old, old story. So old Adam Smith warns against it, those willing to pay really high interest rates are those you don’t want to be lending to.
But this is a grand, screaming, red neon, warning sign:
A marketing agency, Surge, was used to approve LCF promotions and help it attract new investors. Surge received a 25pc commission for each customer it signed up.
Assuming the Telegraph has that number right – arts graduates and numbers etc – then that’s actually all we need to know it’s a scam. For it means that the money invested has to make a 33% return – assuming a one year term – before it even breaks even, let alone pays 8% interest. Which isn’t one of those things that happens really……