The Financial Services Compensation Scheme (FSCS) has revealed that it has paid more than £20 million in compensation to nearly 1,300 customers for the collapsed mini-bond provider, London Capital & Finance. This figure is 50 percent higher than the scheme paid out in compensation last month.
This lifeboat system attributed the better metrics to the increasing number of its staff dedicated to review 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 the end of December.
Around 12,000 investors suffered major losses following the £236 million collapse of the mini-bond issuer, London Capital & Finance (LCF) in 2019. However, a small number of LCF customers have received compensation so far while the vast majority of the bondholders are still waiting to hear if they have any chance of getting their money back.
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New Evidence Leads to More Becoming Eligible for Compensation
According to the FSCS’s forecast, it expects to pay up to £44 million to cover the estimated compensation costs for investors who bought the unregulated investment products in the hope of high returns.
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. It has also gained access to an additional 100,000 emails held within LCF’s email server. This extended the time frame to complete the process beyond the original deadline that was scheduled for the end of September.
“While we still have a lot of claims to review, we want to reassure LCF customers that this remains a high priority for us and we’re working to pay customers as quickly as possible. We know that this is an extremely difficult time for LCF customers, and we really appreciate your patience while we continue our review of LCF claims,” the FSCS said.
But whilst some investors would not be satisfied with this extension, the move gives hope to a larger proportion of London Capital & Finance customers who were classified as uneligible for recompense.