UK compensation body updates Q&A regarding London Capital & Finance
FSCS advises customers of LCF on how to check whether they transferred to LCF from a stocks and shares ISA.
Shortly after publishing the first version of its Q&A section related to the failure of London Capital & Finance, the UK Financial Services Compensation Scheme (FSCS) has updated the section.
Customers of the failed firm may find useful the advise provided by FSCS concerning finding out if a customer transferred to LCF from a stocks and shares ISA.
FSCS is aiming to pay cases involving transfers to LCF from an existing stocks & shares ISA automatically. The body will use LCF’s records, so these investors should not have to make a claim to FSCS.
If customers would like to check for themselves, the documentation they received when they bought their previous ISA will include information about what type of ISA it is. Customers could also try asking their previous ISA provider for details of who the ISA was transferred to, the date of transfer and confirmation it was a stocks and shares ISA.
In light of 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. The Scheme explained 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.