If It Looks Too Good to Be True, It Probably Is!



Investors who were promised 8%pa returns have found out that Bond & ISA provider London Capital & Finance has gone into administration leaving 14,000 investors in limbo as to whether they will get back the capital they invested.

Many of those investors who invested directly with the company, probably didn’t get advice from an Independent Financial Adviser and I bet they wish they had now!


Last year, I had a conversation with a client of mine in West Wales who had seen London Capital & Finance’s attractive 8% website offer and wondered whether he should invest £20,000 of his hard-earned ISA savings to try and get a better return than the miserable rate of 0.5% offered on his bank Cash ISA. After all, who could resist an attractive 8% return of £1600 pa compared with an expected bank return of £100pa?


He was attracted to the glossy website, which looked impressive, and no doubt their literature did too but I asked my client some questions:

  • Was he prepared to lose any of his investment, possibly all of it?
  • What did he know about the company?
  • Did they have a good track record?
  • Were these products covered by the Financial Services Compensation Scheme (FSCS) if something went wrong?


The killer question was the last one!


Guess what? The Bonds and ISAs from London Capital & Finance were unregulated and not covered by the FSCS. If the company went into administration, he stood to lose all his investment.


My client took my advice and didn’t invest, thankfully.


Yet 14,000 people did. I have little sympathy for those who are tempted by the high returns offered for investing in projects such as the construction of golf courses and apartments in the Caribbean, palm tree oil plantations in the Far East or airport car parking. If the investment is not covered by the FSCS and you haven’t sat down with an FCA approved independent financial adviser to discuss such investments, don’t be tempted by the friendly salesman on the phone, the glossy brochure that comes through the post with your Sunday newspaper or that fancy daytime Sky TV advert when you’re having afternoon cup of tea and chocolate hobnobs.


You are merely gambling with your savings.


Always remember, “If it looks too good to be true, it probably is!”


Gary Slater is an Independent Financial Adviser and Director of D&G Independent Ltd. These are his own views and are based on Gary’s common-sense approach to financial advice. If you would like to discuss your financial options, you can visit us at our office in Mold, North Wales. To arrange an appointment, please call 01352 754272.




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