Britain’s Financial Services Compensation Scheme (FSCS) said today it has paid over £50.9 million in compensation to 2,584 investors in the collapsed mini-bond provider, London Capital & Finance.
Of this amount, £12.8 million in compensation was paid since the lifeboat system provided its last update in October.
Around 12,000 investors suffered major losses following the £236 million collapse of mini-bond issuer London Capital & Finance (LCF) in 2019. However, a small number of LCF have received compensations so far while the vast majority of the bondholders are still waiting to hear if they have any chance of getting their money back.
This FSCS attributed the better metrics to the increasing number of its staff dedicated to reviewing LCF claims by nearly 80%. Although this helped speed up the process, the FSCS does not expect to complete paying for all claims against the failed firm before next year.
Some Claimants Are Still Fighting for Eligibility of Compensation
To kickstart this process, the FSCS reviewed almost a million pieces of evidence in order to determine, which customers had been given misleading advice by LCF. Moreover, it has gained access to an additional 100,000 emails held within LCF’s email server.
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Additionally, the lifeboat fund states that a large proportion of the evidence they needed to review was telephone calls. For this purpose, they doubled the headcount of their specialist team and worked with a company called Capita to create an Artificial Intelligence (AI) solution to help them review 700,000 phone recordings.
Without the use of AI, the FSCS estimates that it would not be able to start paying claims until January 2021 or to complete this work before 2022.
Some claimants are still fighting for eligibility of compensation and asked the court to scrap the decision that considered LCF bonds issued after January 3, 2018, was not a regulated activity.
The affected bondholders say they bought ‘mini-bonds’ from London Capital & Finance only after receiving assurance from the FSCS that their money was covered by the UK’s compensation scheme. As such, the FSCS is accused of giving misleading information over the protection they should expect.