London Capital & Finance compensation costs lead to increase in FSCS levy for 2020/21

Maria Nikolova

The levy includes £44 million to cover estimated compensation costs for London Capital and Finance.

The UK Financial Services Compensation Scheme (FSCS) today confirmed its levy for 2020/21. The Scheme will levy firms £649 million this year, up £14 million from what was forecast in its Plan and Budget 2020/21 that was published in mid-January.

The main change in the compensation forecast since the indicative levy was announced in the Plan and Budget, is the inclusion of £44 million to cover estimated compensation costs for London Capital and Finance (LCF). This will be attributed to the Life Distribution and Investment Intermediation Class. However, savings in other classes (mainly Deposits and General Insurance Distribution) mean that the overall increase from the January indicative levy is £14 million.

Caroline Rainbird, FSCS CEO, said:

“The overall increase in the FSCS levy since the January forecast partly reflects the ongoing progress we are making in relation to the LCF failure. As we announced earlier this month, we have now started the process of reviewing individual LCF claims relating to misleading advice. Whilst it is too early to say how many LCF customers will be eligible for compensation, for the purpose of the levy we have estimated an amount of £44m”.

As FinanceFeeds reported earlier in May, FSCS intends to start issuing decisions on LCF claims relating to misleading advice given to its customers before the end of May. The Scheme expects to complete the process of reviewing claims by the end of September.

FSCS explains that it has simplified the process by ensuring LCF customers do not need to submit a claim or provide any further information at this stage.

While FSCS is aware there are some customers who were given misleading advice, and will, therefore, be entitled to compensation, the Scheme still expects that a large proportion of LCF customers will not be eligible for compensation on this basis.

FSCS said in February that it 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.

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.

Read this next

Digital Assets

Kraken acquires TradeStation’s cryptocurrency business

Kraken, the second-largest U.S.-based cryptocurrency exchange, has acquired the cryptocurrency arm of online brokerage TradeStation.

Retail FX

The Funded Trader is back? Traders report account closures

Prop trading firm The Funded Trader has updated its website with a few banners, nearly three weeks after it ceased all operations, with claims for a relaunch in the near future. However, there was no official statement on the relaunch on its website, Discord channel, or social media accounts yet.

Executive Moves

NAGA lures former Tickmill compliance exec Loukia Matsia

NAGA Group, a provider of brokerage services, cryptocurrency platform NAGAX and neo-banking app NAGA Pay, appointed Loukia Matsia as their new Head of Compliance and Anti-Money Laundering (AML).


Explore 2024’s Top Cryptocurrencies: BlockDAG Leads With 30,000x ROI Potential, Among Surge Predictions For Bitcoin And Ethereum

Navigating the vast ocean of cryptocurrencies might feel overwhelming for many investors, whether seasoned or newbies.

Tech and Fundamental, Technical Analysis

EURUSD Technical Analysis Report 18 April, 2024

EURUSD currency pair can be expected to fall further toward the next support level 1.0600 (which reversed the price earlier this month).

Digital Assets

Binance ordered to remove Changpeng Zhao to get Dubai license

Binance, the world’s largest cryptocurrency exchange, has obtained a Virtual Asset Service Provider (VASP) license in Dubai.

Crypto Insider

Evolution and current state of global crypto adoption

Every four years, the crypto world gets hyped for the Bitcoin halving. Past halvings, like the one of May 2020, saw a massive increase in BTC transactions, which was driven by growing adoption and community involvement.

Digital Assets

Binance set to re-enter India with $2 million fine settlement

Binance, the world’s largest cryptocurrency exchange, is preparing to re-enter the Indian market after agreeing to pay a $2 million fine, according to a report by the Economic Times.


Over 1,000 Builders, Partners, Investors and Enthusiasts Gather at Inaugural Global Event to Celebrate Sui

Last week in Paris, over 1,000 blockchain enthusiasts from 65 countries gathered at the inaugural Sui Basecamp during Paris Blockchain Week. This milestone event showcased major announcements and drew a global community, highlighting Sui’s impactful strides in blockchain technology.