The Financial Services Compensation Scheme (FSCS) has provided a final date for the closure of the scheme to compensate investors who lost money in the London Capital & Finance scandal, namely October 31, 2022.
The FSCS has asked the families of the victims of the London Capital & Finance (LCF) mini-bond company collapse to contact the lifeline fund as the case nears closure. He added that there are a small number of unpaid claims where the system requested information multiple times but did not get a response or where the bondholder passed away and FSCS was unable to locate their relatives.
Some 12,500 investors suffered heavy losses following the £236m collapse of the mini-bond issuer two years ago. London Capital & Finance plc (LCF) went into administration on 30 January 2019 and was declared bankrupt by the FSCS a year later. The authority has been running the scheme on behalf of the government since November 2021.
Since the scheme began, FSCS said it has paid more than £115m in compensation to 12,330 investors, or 99.5% of clients eligible for compensation. Of this figure, the FSCS has contacted more than 700 bondholders with details of their compensation since the scheme provided its last update in April. The latter installment was paid under a government redress scheme to reimburse eligible LCF victims.
To start the process, the FSCS reviewed nearly a million pieces of evidence to determine which clients had received misleading advice from LCF. It also gained access to an additional 100,000 emails sitting on LCF’s email server, extending the time frame for completing the process beyond the original deadlines.
“We may be able to pay these claims in exceptional circumstances after October 31, 2022. However, as the government scheme is closing, it may take longer for us to process these claims and pay compensation. You can find more information in the pop-up FAQ. If you have recently received a check, you will still be able to cash it after October 31, 2022, as long as it is cashed within six months of the date it was issued,” the statement read.
The government-funded scheme is available to all individual bondholders who have not yet been compensated by the FSCS. Under the proposed terms, the government would pay 80 per cent of the compensation, up to a maximum of £68,000, that LCF clients would have received if they were eligible for FSCS protection.