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.

Read this next

Digital Assets

Luxembourg’s regulator warns on false regulation of Crypto Capital Profits

The regulator of Luxembourg’s financial markets, the Commission de Surveillance du Secteur Financier (CSSF), has warned that a firm claiming to be authorized under the name Crypto Capital Profits is in fact not licensed to carry out business from within its jurisdiction.

Institutional FX

FINRA fines Wedbush $900K over reporting violations

The Financial Industry Regulatory Authority continues to take disciplinary actions against financial services firms for providing inaccurate securities trading information.

Digital Assets

Bitkub investigated by Thai regulator in ‘wash trading’ case

Thailand’s Securities and Exchange Commission has targeted Bitkub over allegations of inaccurate reporting and wash trading on its cryptocurrency platform.

Crypto Insider

Crypto.com secures approval to launch its services in France

Crypto.com has registered its cryptocurrency services with the dual regulatory structure in France, which includes the Autorité des Marchés Financiers (AMF) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR).

Inside View

How to offer iOS compliant trading apps? Editorial by Chris Rowe

Webtraders are becoming increasingly important for FX and CFD brokers as more and more of their clients are trading using their mobiles. 

Institutional FX

SpiderRock deploys Eventus trade surveillance for futures and options offering

“As we have begun to provide direct market access as a routing broker and grown in our futures offering, which is subject to a different regulator, we wanted to make sure we chose a trade surveillance platform that has all the tools that we need, a format we can review easily, and capabilities to demonstrate to regulators that we have the proper trade surveillance procedures in place. Validus checks all the boxes for us.”

Industry News

Space and Time raises $20 million to grow its decentralized data warehouse

“We look forward to seeing the ways in which Space and Time will allow the business logic in centralized systems to be automated and connected directly to smart contracts.”

Digital Assets

Mastercard, hi app partner to issue cards with NFT avatars

In partnership with Mastercard, crypto and fiat financial app hi is launching what it calls “the world’s first debit card featuring NFT avatar customization.”

Digital Assets

Wirex to support government of Uzbekistan to adopt blockchain

“We’re excited to work alongside the Uzbekistan Direct Investment Fund in order to help the sector thrive, enrich the financial ecosystem there and set a benchmark for other countries, and ultimately expand.”

<