Finance Feeds logo

FSCS to start reviewing misleading advice claims against London Capital & Finance in Q1 2020

Maria Nikolova

The Compensation Scheme believes that some bondholders received misleading advice from LCF and that these individuals will have valid claims for compensation.

Shortly after the UK Financial Services Compensation Scheme (FSCS) announced its key decisions for claims regarding the London Capital and Finance (LCF) failure, the Scheme has published an update to its Q&A about this case.

Given the public outcry following the FSCS’s statement that it will only be protecting 159 bondholders, the Scheme has offered some clarification on the matter.

FSCS announced last week that it would pay compensation to 159 LCF bondholders who transferred out of stocks and shares ISAs to invest into LCF bonds. The Scheme explains that it can only pay compensation to customers where there is a regulated activity. Arranging a transfer out of a regulated investment, such as a stocks and shares ISA, is a regulated activity.

To determine that this small population of bondholders is protected, the Scheme did not need to review customer interactions with LCF. It just had to be satisfied that the source of the money was an existing stocks & shares ISA.

Separately, FSCS believes that some bondholders received misleading advice from LCF and that these individuals will have valid claims for compensation. Advice is a regulated activity. The Scheme aims to start reviewing these advice claims in the first quarter of 2020.

The remaining bondholders will receive an update by the end of February.

The key difference between “advice” and “information” is that advice, in the context it has been given, includes an element of comment or value judgement that is likely to influence a customer’s decision to invest.

This means the decision about whether a customer was given misleading advice will depend precisely on what was said to the customer and in what context. Each advice claim is unique and will have to be assessed individually and a decision reached based on the information FSCS has.

Subscribe

Read this next

Digital Assets

US wants Bittrex to settle federal dues before compensating customers

The U.S. government has raised objections to Bittrex’s proposal to compensate its customers, adding to concerns about the resolution of the crypto exchange’s bankruptcy case.

Bittrex
Digital Assets

Binance prepares to suspend US dollar funding after SEC crackdown

Binance.US said it will temporarily suspend US dollar deposits and provided customers with a deadline to withdraw their fiat balances. This decision comes after the US Securities and Exchange Commission (SEC) filed a lawsuit requesting the freezing of Binance’s assets in the country.

Binance.US
Digital Assets

Januar launches real-time payments network to fill gap made by Silvergate and Signature

“To all the entrepreneurs and innovators out there is a clear message: if you are a legitimate European business working with crypto then Januar is here to provide you with the account and payment infrastructure you need to operate successfully and build the financial system of tomorrow.”

Retail FX

Exness’ active clients top 515K as monthly volume hits $3.35 trillion

FX trading volumes are climbing again as economic uncertainty spurred by recent developments over central banks’ policies encouraged speculators to pile back into the market.

Exness Dove
Technology

Danske Bank plans signficant investment in digital platforms

“We have decided to significantly increase our investments in our digital platforms, expert advisory services and sustainability, focusing on the areas where we see the best opportunities for profitable growth.”

Digital Assets

ERD DeFi Lending Platform and USDE Stablecoin Unveiled at EDCON 2023

ERD, the Ethereum Reserve Dollar, is a decentralized lending platform and stablecoin that aims to provide a capital-efficient, decentralized, and stable solution to the challenges faced by the stablecoin industry, introducing a minimum collateralization ratio of 110% and a robust liquidation mechanism.

Institutional FX

CMC Markets acquires 33% stake in UK blockchain firm StrikeX

“This is a major strategic investment in the growing Web 3.0 technology space of which StrikeX Technologies gives us access to the very best technology and advancements. StrikeX is a brilliant, young dynamic company, with a very talented team that has its finger on the pulse of fast moving technologies.”

Digital Assets

Archax utilizes Hedera Hashgraph DLT to tokenize interest in abrdn’s money market fund

“It is exciting to see a tangible application of Archax’s tokenization engine working with Hedera and it paves the way for us to look at creating other digital, blockchain-based token investment solutions.”

Institutional FX

Citi connects directly to Hong Kong’s central clearing and settlement system

“In 2020, we were the first sub-custodian in Hong Kong to offer our clients real-time notification of the trade matching status. The latest solution is a continuation of our efforts to provide a complete suite of services that are as close to real-time as possible.”

<
✖