FSCS warns of false communications targeting LCF customers
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.
According to the FSCS, there are letters circulating that appear to be on its official letterhead, urging LCF customers to contact them for compensation related to the liquidation of LCF assets. However, the FSCS clarified that these letters are part of a scam and are not legitimate communications from the lifeboat scheme. The FSCS advised clients to disregard these letters and not engage with them.
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.
The uptick in scammers activities comes nearly 10 months after FSCS closed the scheme to compensate investors who lost money in the London Capital & Finance scandal. In October 2022, the commission called on the families of victims of the collapse of mini-bond company to get in touch with the lifeboat fund as the case nears closure.
At the time, FSCS said that there are a small number of claims that weren’t paid out where the system requested information multiple times but had no reply or where the bondholder has passed away and FSCS have not been able to locate their next of kin.
Around 12,500 investors suffered major losses following the £236 million collapse of the mini-bond issuer two years ago. London Capital & Finance plc (LCF) went into administration on 30 January 2019 and FSCS declared it had failed a year later. The authority has been administering the scheme on behalf of the government since November 2021.
Since the scheme began, FSCS said it has paid over £115 million in compensation to 12,330 investors, or 99.5% of customers eligible for compensation. 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.
To kickstart with the process, the FSCS reviewed almost a million pieces of evidence in order to determine which customers had been given misleading advice by LCF. It has also gained access to an additional 100,000 emails held within LCF’s email server, which extended the time frame to complete the process beyond the original deadlines.
The government-funded scheme was 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.
