The UK’s Financial Conduct Authority (FCA) has imposed restrictions on the operational license of London Capital Group Ltd (LCG), a retail forex and contracts for differences (CFDs) broker owned by the now-bankrupt FlowBank. The restrictions follow the Swiss regulator’s intervention into FlowBank, initiating bankruptcy proceedings against it.

Actions against LCG Following FlowBank’s Bankruptcy

“LCG has engaged an independent firm to establish the current financial status of the UK entity,” a message on the LCG’s UK website shows. “While this assessment is ongoing, LCG has applied to the FCA to place certain restrictions on our regulatory permissions.”

LCG is owned by FlowBank, founded by former LCG CEO Charles-Henri Sabet. Previously, LCG was part of the London Capital Group Holdings, which encountered trouble after delisting from the London Stock Exchange and NEX Exchange in 2018. That same year, Charles-Henri Sabet, then CEO, bought LCG, separating it from the troubled London Capital Group Holdings, which went into liquidation.

Sabet made structural changes in LCG's ownership after launching Switzerland-based FlowBank in 2020. Last year, the UK unit of LCG altered its business model, becoming an introducing broker for IG, once its rival company.

No Onboarding of Clients

According to the FCA’s registry, all restrictions on LCG were imposed on 13 June 2024, the same day Switzerland’s Financial Market Supervisory Authority revoked FlowBank’s license and put the company into bankruptcy.

The FCA’s actions against LCG include restrictions on onboarding new clients or introducing any new client under its introducing broker business. Furthermore, it cannot accept new client money or carry out any regulated activities. Additionally, the regulator also imposed asset restrictions on the company, prohibiting it from disposing of or diminishing any of its own assets or customer funds, whether in the UK or outside.

“As part of this voluntary arrangement, we are not currently conducting new regulated activity,” the notice added on the LCG’s website. The company urges its “legacy clients who continue to hold balances directly” with the company to withdraw their funds from the platform.

“Your funds continue to be held in ring-fenced, designated client money accounts,” LCG noted, adding that “If you are an existing client of LCG’s Introducing Broker/Partnership business holding an account with one of our Partner firms, you are unimpacted by these developments – your account continues to operate as normal.”

Apart from the FCA-regulated entity, LCG has another sister entity licensed in the Bahamas. However, that unit does not display any notice of regulatory restrictions.

Meanwhile, the majority shareholder of FlowBank heavily criticized the actions of the Swiss regulator, calling it a violation of rights. It also highlighted that it would take “all necessary procedures” against the regulator, indicating a possible lawsuit.