The Financial Conduct Authority (FCA) in the UK has restricted London Capital Group Ltd (LCG) ‘s onboarding of new clients. This action was taken in response to the Swiss regulator’s initiation of bankruptcy proceedings against FlowBank, LCG’s parent company.
LCG’s Measures Following FlowBank’s Bankruptcy
LCG has announced that they have employed an independent firm to review the financial state of their UK operations. This ongoing review led LCG to proactively apply for a restriction of their regulatory permissions by the FCA. Charles-Henri Sabet, who formerly served as LCG’s CEO and founded FlowBank, purchased LCG from London Capital Group Holdings in 2018. Following this acquisition, LCG was removed from the London Stock Exchange and NEX Exchange before implementing structural changes. FlowBank was launched in 2020, and last year, LCG UK became an introducing broker for IG.
Restrictions on Client Onboarding
On June 13, 2024, the FCA imposed restrictions on LCG, coinciding with the Swiss Financial Market Supervisory Authority’s revocation of FlowBank’s license. LCG is now prohibited from onboarding new clients or introducing clients through its broker services. Furthermore, it cannot accept new client funds or perform regulated activities, and assets, including customer funds, are restricted from being used or reduced.
A notice on LCG’s website indicates, “We are not conducting any new regulated activity.” The company has suggested that its legacy clients withdraw their funds, ensuring that their funds are held in segregated, designated client money accounts. Clients with other partner firms remain unaffected by these restrictions.
Bahamas Operations and Shareholder Reactions
LCG’s sister entity, which operates in the Bahamas, has not faced any regulatory restrictions. Meanwhile, FlowBank’s main shareholder has criticized the actions of the Swiss regulator, describing them as a violation of rights, and has indicated intentions to pursue legal action against the regulator.
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