UK Economic Secretary gives evasive answer to question about London Capital & Finance compensation
John Glen got evasive when asked about an ad hoc compensation scheme for people affected by the collapse of London Capital and Finance.
In the face of the set of inquiries launched into the circumstances around the demise of London Capital & Finance, questions about the entity and its failure continue to pile up. The answers, however, are rare and are far from definite.
On Monday, June 17, 2019, John Glen, Economic Secretary to the Treasury, gave yet another evasive answer when asked about possible ways of compensation of clients of LCF.
Gordon Marsden asked the Chancellor of the Exchequer, whether he plans to establish an ad hoc compensation scheme for people affected by the collapse of London Capital and Finance.
In his response, John Glen said that the administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure.
“The Financial Services Compensation Scheme (FSCS), as the compensation scheme of last resort, can only provide compensation for claims connected with certain types of regulated activities. They are working closely with LCF’s administrators and the Financial Conduct Authority to understand more about LCF’s activities and whether there are grounds for compensation”, John Glen added.
Let’s recall that the FSCS has invited LCF investors to register for updates on the compensation scheme’s website.
FSCS, which had initially stated that it would not accept claims from LCF clients, has changed its stance since.
In its latest update on the matter, issued on May 31, 2019, FSCS says that, over the last few weeks it has been reviewing whether there may be grounds for compensation. This work is focused on the relationship between LCF and Surge Financial Ltd and the extent to which either company may have been carrying out regulated advising, arranging or other activities that could give rise to an eligible claim for compensation.
Following FSCS’s investigations, the body claims it now understands LCF’s business practices much better, and it believes there are sufficient grounds for it to carry on exploring these issues.
One increasingly important aspect is the need to consider the different ways investors dealt with the firm when buying their products, as this could impact whether compensation is due or not. This is a complicated case involving significant factual analysis, external legal advice and close work with both the FCA and the administrators, so it will take time.