The Financial Conduct Authority has fined a former director of London Capital & Finance £31,800 and banned him from working in financial services.
According to the regulator, Floris Jakobus Huisamen was responsible for compliance at the company but "recklessly" signed off hundreds of financial promotions, which contributed to thousands of investors being misled.
The FCA said minibonds marketed to retail investors presented a misleading picture and did not give the full picture about the risks of the product, including hidden charges and the unsustainable nature of the lending.
Huisamen signed off the promotions despite his own concerns about LCF’s strategy, said the FCA.
The regulator added he failed to obtain evidence of the claims being made, allowed promotions that gave a misleading impression that the minibonds were regulated by the FCA and continued to approve promotions even when he became aware of inaccurate claims.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: “Mr Huisamen should have ensured LCF’s financial promotions were ‘fair, clear, and not misleading’.
"However, under him, the approval process became an ineffective tick-box exercise – as a result, thousands of investors were persuaded to invest on the basis of highly misleading statements.
“His failings contributed to thousands of retail investors losing significant amounts of money. It is right that he can no longer work in financial services.'
In October, the company was censured for its “unfair and misleading” promotions of minibonds.
The regulator did not impose a financial penalty on the company because it is insolvent and in administration and the FCA said doing so would “divert funds that the administrators may use for the benefit of bondholder creditors”.
The firm collapsed in 2019 owing more than £230mn and putting 14,000 bondholders at risk.
The FCA’s handling of the company's 2019 collapse was branded “one of the largest conduct regulatory failures in decades” by the Treasury committee, which urged the FCA to implement a change in culture to protect consumers and financial markets.
tara.o'connor@ft.com
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