The Financial Services Compensation Scheme (FSCS) says it will start to issue decisions on London Capital & Finance (LCF) claims by the end of May 2020. The process is expected to be completed by the end of September 2020.
Quite simply, when a decision is reached on each claim, the individual customer will receive a letter informing them of the outcome, and if their claim has been successful, the letter will be accompanied by a cheque for what FSCS judges to be the appropriate amount of compensation.
Caroline Rainbird, FSCS’s CEO said:
“Having spent time reviewing all of the information we have gathered, I am pleased that we are now in a position to look at individual claims and will start to issue decisions on those claims this month, thereby providing some certainty for LCF customers.
“We appreciate that this process has been a lengthy one and that for many LCF customers the wait is not yet over. We want to reassure LCF customers that we are continuing to work tirelessly to bring this process to a conclusion and ensure that those customers who are entitled to compensation receive it.”
The LCF saga has been one of the most controversial stories in financial services in recent times.
Before it collapsed into administration, LCF was a firm that issued mini-bonds. However, the bonds themselves are not regulated by the Financial Conduct Authority, so most customers of the firm had no FSCS protection and lost their entire investment when the firm failed.
In its latest press release, FSCS acknowledges this by saying once again that a large proportion of LCF customers will not be eligible for compensation.
The only LCF customers who are likely to receive compensation are those who transferred funds from stocks & shares ISAs into the mini-bonds, or those who received professional advice to invest in the LCF bonds, and whose advice may have been misleading as to the existence of FSCS cover. In the latter case, they are eligible for FSCS protection as providing financial advice is an FCA-regulated activity. Those who transferred out of ISAs into LCF bonds have already been compensated, however only 159 customers fell into this category.
FSCS will provide a further update on the situation before the end of June.
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