The UK Financial Services Compensation Scheme today said it has started paying compensation to investors who relied on claims for misleading advice in the collapsed mini-bond provider London Capital & Finance.
To kickstart with his process, the FSCS reviewed almost a million pieces of evidence in order to determine which customers had been given misleading advice by LCF. It has also gained access to an additional 100,000 emails held within LCF’s email server, which would extend the time frame to complete the process beyond the original deadline that was scheduled for the end of September.
But whilst some investors wouldn’t be satisfied with this extension, the move gives hope to a larger proportion of London Capital & Finance customers who were not classified as eligible for recompenses on this basis.
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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 who 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.
“We have set up a specialist team, focussed on reviewing advice claims on a case by case basis. We’ve gathered the evidence ourselves, removing the need for customers to provide this or to complete an application form. We’ve not required LCF customers to obtain additional information from third parties in support of their claim. These changes have enabled us to review claims without customers needing to take any action,” the statutory lifeboat fund said in its latest update.
According to the FSCS’s forecast, it expects to pay up to £44 million to cover estimated compensation costs for investors who bought the unregulated investment products in the hope of high returns.
Most recently, FSCS has passed all claims against failed discretionary fund manager Strand Capital Limited to its claims processing teams for assessment. In an update on its website, the lifeboat scheme said it was aware that some Strand customers were advised by independent financial advisers to transfer existing assets to the firm that was put into special administration in May 2017.