FSCS warns London Capital & Finance’s investors of recovery scam

abdelaziz Fathi

Britain’s Financial Services Compensation Scheme (FSCS) today warned clients of the collapsed broker London Capital & Finance about persons that approach them, claiming that they can help them refund their investments.

’London Capital & Finance

Around 12,500 investors suffered major losses following the £236 million collapse of the mini-bond issuer in 2019.

The lifeboat system said investors should not be lulled into false communications ‎trying to usurp its identity to defraud them in a recovery scam, in which individuals are asked to pay a fee upfront before they receive any proceeds.

“LCF bondholders are still being approached by scammers. Fraudsters using the company names LC Holdings and Capital Finance are claiming to be able to get compensation for the full amount of your LCF investment. Both are scams, and there may well be others. Be very wary of any emails, letters or calls claiming to be from LCF or someone else offering to help you get access to compensation. If you are unsure at any time if a call is genuine, please hang up and contact us directly using the information on our Contact us page,” FSCS added.

The uptick in scammers activities comes two weeks after FSCS said it has paid over £114 million in compensation to 12,330 investors. 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.

A common type of fraud

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.

This type of activity is typical of the fraud mechanism known as a ‘recovery room.’ Although the regulators could help people who have lost money, they don’t charge a fee, guarantee money back, or give special preference to anyone who files a formal complaint.

While there are many variations of these tactics, the refunding scams are simply defrauding the victims one more time.

They use a variety of lies to add credibility to their pitch, and once the victim shows interest, a series of official-looking documents are sent to assure the investor that money is waiting in an account and can be recovered for a fee.

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