HOW LCF COLLAPSE HIT 11,500 VICTIMS

LONDON Capital & Finance was set up in 2012 to provide finance to small firms.

It did this by selling mini-bonds, which allow investors to lend their cash to a company in return for a steady income.

Savers were told funds were going to be put into an Isa, keeping profits tax-free, and then invested in start-ups.

The aim was to provide returns of 8pc a year, much better than savings accounts and other safe investments.

LCF raked in £237m from 11,500 people before being forced to stop taking extra cash this year by the City watchdog the Financial Conduct Authority, which said LCF’s marketing was ‘misleading, not fair and unclear’ with the high-risk bonds not eligible for Isas.

LCF collapsed into administration in January. Administrator Smith & Williamson discovered the money was handed to just 12 firms, all connected to a small group of businessmen.

Investors are likely to get back just 20p for every £1 they invested. And the Serious Fraud Office has made four arrests.