FSCS keeps exploring whether there are grounds for compensation in London Capital & Finance case
The UK compensation scheme says it now understands LCF’s business practices much better.
The UK Financial Services Compensation Scheme (FSCS) has earlier today provided an update to the customers of London Capital & Finance, which entered administration in January 2019.
FSCS, which had initially stated that it would not accept claims from LCF clients, has changed its stance since. Earlier in May, the body said it was investigating whether regulated activities were in fact carried out which might give rise to a claim.
In its latest update, issued on May 31, 2019, FSCS says that, over the last few weeks it has been reviewing whether there may be grounds for compensation. This work is focused on the relationship between LCF and Surge Financial Ltd and the extent to which either company may have been carrying out regulated advising, arranging or other activities that could give rise to an eligible claim for compensation.
Following FSCS’s investigations, the body claims it now understands LCF’s business practices much better, and it believes there are sufficient grounds for it to carry on exploring these issues.
One increasingly important aspect is the need to consider the different ways investors dealt with the firm when buying their products, as this could impact whether compensation is due or not. This is a complicated case involving significant factual analysis, external legal advice and close work with both the FCA and the administrators, so it will take time.
Last week, Dame Elizabeth Gloster was appointed to lead a statutory investigation into the possible regulatory failure surrounding London Capital and Finance (LC&F). The deadlines of the investigation, however, have given rise to concerns. Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said the move for the investigation was welcome but voiced concerns about the speed at which the probe will progress.
“Investors will want answers urgently, and may be surprised by the 12 month deadline for the investigation to conclude. This cannot be kicked into the long grass. The FCA, HM Treasury and Dame Elizabeth must think innovatively about how the investigation can report quickly”, Nicky Morgan said.
