Ministers face further scandals on the scale of London Capital & Finance unless they tackle investment fraud with the Online Safety Bill, MPs have warned.
LCF – an unregulated seller of ‘mini-bonds’ – left 11,600 investors facing losses of more than £200m when it collapsed two years ago. The firm and its directors are being investigated over suspected fraud.
Many savers were drawn to the ill-fated scheme by online advertisements, which LCF paid Google £20m to display.
Warnings: MPs are demanding that online advertising be included in the scope of the Online Safety Bill currently going through Parliament
It has prompted MPs on the Treasury committee to call on the Government to crack down on advertising for financial products to help prevent similar disasters in future.
They are demanding that online advertising be included in the scope of the Online Safety Bill currently going through Parliament, so that internet firms will be forced to check the credentials of advertisers behind promotions.
It echoes the Mail’s Stamp Out Investment Fraud campaign, which also calls for financial fraud and bogus adverts to be covered by the bill.
Mel Stride, the committee’s chairman, said: ‘The collapse of LCF severely impacted many investors and highlighted considerable regulatory failings. However, it is not yet clear whether the Government will include fraudulent advertisements within the scope of the bill. To prevent fraud in the future, this is an issue that must be addressed.’
The Mail’s campaign is backed by regulators and industry giants such as Lloyds Bank, HSBC, Aviva and Hargreaves Lansdown, yet Culture Secretary Oliver Dowden has so far refused to widen the legislation’s scope.
But the Treasury committee says ministers need to ‘intervene urgently’ to prevent further scandals like LCF.
They say the Financial Conduct Authority, the City watchdog, should be able to expand its remit and that internet platforms should be legally obliged to take down scam adverts. Ministers insist the Online Safety Bill is not the right way to tackle scam ads.
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