FSCS pays about £2.7m to 135 London Capital & Finance customers
The payments were made in relation to 151 bonds that were invested following transfers out of stocks and shares ISAs.
The UK Financial Services Compensation Scheme (FSCS) today announces that it has paid just under £2.7 million to 135 LCF customers in relation to 151 bonds. These bonds were invested following transfers out of stocks and shares ISAs.
The Scheme made these payments automatically, without these customers needing to make a claim themselves. FSCS explains that has been able to compensate this group of customers because arranging a transfer out of a stocks and shares ISA is a regulated activity.
Those who have not received compensation from FSCS by February 24, 2020, but believe they transferred out of a stocks and shares ISA are advised to send supporting evidence to FSCS.
The body has also concluded there will be some customers who were given misleading advice by LCF. These customers have valid claims for compensation, and FSCS is continuing to review the evidence as quickly as possible.
FSCS will update these customers by the end of March 2020. At this stage, these customers do not need to make a claim.
LCF entered administration on January 30, 2019, and since then FSCS has investigated many alternative possible bases for claims. Around 11,600 bondholders purchased 16,700 bonds from LCF worth £237 million.
The Scheme has explained that it is unable to protect the 283 bondholders who dealt with LCF before it was authorised to carry out financial services business (on June 7, 2016). FSCS will contact these customers to confirm this.
FSCS maintains that the act of issuing mini bonds is not a regulated activity, and is therefore not something protected by FSCS. The Scheme has determined there will be some customers who were given misleading advice by LCF and have valid claims for compensation as a result. However, FSCS expects that many customers will not be eligible for compensation on this basis.