The board of the UK's Financial Conduct Authority has announced that HM Treasury will direct it to commission an 'independent person' to investigate the issues raised by the failure of London Capital & Finance.

LC&F went into administration in January after taking £236 million from investors. This followed concerns raised by the FCA in December. In that month, the FCA directed LC&F to withdraw its promotional material for its mini-bonds because the marketing was “misleading, not fair and unclear.” Although the FCA regulated the promotional material, nobody regulated the product itself.

The Rt Hon Nicky Morgan MP, the chair of the Treasury Committee, wrote to the FCA's board last month to ask it to "consider whether the tests around the need for a statutory investigation into possible regulatory failure surrounding LC&F have been met."

HM Treasury owns the regulator, so it can tell it at any time to conduct such an investigation. Mrs Morgan therefore wrote to John Glen MP, the Economic Secretary to the Treasury, to ask him to do so if the FCA were to decline to investigate. It has been announced today that the Treasury has agreed.

Mrs Morgan said: “The committee will query why the FCA required the Treasury’s help to commission an investigation. Investors will want answers. It is entirely possible that other firms are offering products to investors under the guise of FCA regulation, which may not be wholly the case. The committee will want assurances the FCA is guarding against a similar outcome for other unsuspecting investors.”