FSCS closes London Capital & Finance (LCF) scandal after three years
The Financial Services Compensation Scheme (FSCS) has provided a final date for closing the scheme to compensate investors who lost money in the London Capital & Finance scandal, namely on 31 October 2022.
FSCS has called on the families of victims of the collapse of mini-bond company London Capital & Finance (LCF) to get in touch with the lifeboat fund as the case nears closure. It added that there are a small number of claims that weren’t paid out where the system requested information multiple times but had no reply or where the bondholder has passed away and FSCS have not been able to locate their next of kin.
Around 12,500 investors suffered major losses following the £236 million collapse of the mini-bond issuer two years ago. London Capital & Finance plc (LCF) went into administration on 30 January 2019 and FSCS declared it had failed a year later. The authority has been administering the scheme on behalf of the government since November 2021.
Since the scheme began, FSCS said it has paid over £115 million in compensation to 12,330 investors, or 99.5% of customers eligible for compensation. 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.
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.
“We may be able to pay these claims in exceptional circumstances after 31 October 2022. However, as the government scheme is closing, it may take us longer to process these claims and pay compensation. You can find more information in the pop-up FAQ. If you have recently received a cheque, you will still be able to cash it after 31 October 2022, as long as it is cashed within six months of the issue date,” the statement reads.
The government-funded scheme is available to all individual bondholders who have not already compensated by the FSCS. Per the proposed terms, the government would pay 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.