Britain’s lifeboat system to conclude LCG compensation scheme
Britain’s Financial Services Compensation Scheme (FSCS) said today it’s preparing to close the compensation scheme of the collapsed mini-bond provider, London Capital & Finance.
The lifeboat system has been administering the scheme on behalf of the UK government. The government-funded scheme has been available to all individual bondholders who have not already compensated by the FSCS. Per the terms, the government paid 80 percent of the compensation, up to a maximum of £68,000, that LCF clients would have received if they were eligible for FSCS protection.
The FSCS invited the families of deceased investors in LCG to contact the commission after it had already paid compensation on 99 percent of bonds impacted by the collapse ahead of the deadline.
“Some LCF bondholders have sadly passed away since they made their investment. FSCS has managed to contact the families or executors for most of these bondholders, but there are a small number that we have not been able to trace,” it said in an update today on its website.
“If you believe a family member invested in LCF and has since passed away without receiving any compensation from FSCS, please get in touch with us as soon as possible,” it added.
FSCS has paid over £114 million in compensation to 12,330 investors. Of this figure, FSCS has contacted more than 700 bondholders with details of their compensation since the scheme provided its last update in April. The last instalment was paid under a government’s redress scheme to reimburse eligible LCF victims.
The industry lifeboat said it has 30 bonds still to pay which were all for victims whose addresses were out of date and the FSCS was waiting on documents to show evidence of their new address.
Around 12,500 investors suffered major losses following the £236 million collapse of the mini-bond issuer in 2019. The Financial Services Compensation Scheme paid compensation to investors who relied on claims for misleading advice in the collapsed mini-bond provider. The fund said it was aware that some customers were advised by independent financial advisers to transfer existing assets to the firm that was put into special administration in May 2017.
To kickstart with the process, the FSCS reviewed almost a million pieces of evidence in order to determine which customers had been given misleading advice by LCF. It has also gained access to an additional 100,000 emails held within LCF’s email server, which extended the time frame to complete the process beyond the original deadlines.