LCF investors given green light for FSCS judicial review

LCF investors given green light for FSCS judicial review

Six months after they launched the review, the mini-bond investors have got the go-ahead for their judicial review of the Financial Services Compensation Scheme.

Investors who are fighting for more compensation following the collapse of London Capital & Finance (LCF) have been given the good news that they will get a judicial review of the FSCS and its handling of compensation claims.

The judicial review has come in the midst of an ongoing debate regarding mini-bonds falling outside the FSCS usual remit, as they are unregulated investments. The investors are looking to see the compensation decision made by the FSCS overturned and the eligibility for investors broadened as part of the review.

The FSCS has already paid millions in compensation to LCF investors who received misleading advice in relation to their “Fixed Rate ISA” which promised an 8% return. Over 10,000 were tempted to invest.

Last month, the FSCS stated that it had paid more than £20m in compensation to bondholders and issued 1,295 decisions. It also noted  that it had increased the size of the team working on the LCF case by almost 80 per cent.

James Darbyshire, interim chief counsel at the FSCS, said of the decision:

FSCS acknowledges the court’s decision that part of our approach to London Capital & Finance claims will be judicially reviewed.

We have always acknowledged that the failure of LCF involves complex legal and regulatory issues - those issues will now be considered in detail by the court.

FSCS is sympathetic to the situation in which LCF investors have found themselves and remains transparent and cooperative in discussing the issues with them.

Who were London Capital & Finance?

London Capital & Finance went into administration in January 2019 after the FCA froze its activities due to mis-leading, unfair and unclear communications in regards to a “Fixed Rate ISA”.

This ISA promised an 8% return from secure ISAs, and was marketed across the internet using online adverts. A total of 11,500 investors put a combined £237m into London Capital & Finance over the course of two years before the FCA had realised the firm was mis-leading individuals.

London Capital & Finance was authorised by the Financial Conduct Authority (FCA), however the FCA stated this was in relation to providing consumer advice, not the sale of mini-bonds or ISAs.

Not only were investors told they would receive 8% returns on their “secure” ISA, they were also informed that their funds – and therefore their risk – would be spread across hundreds of companies. However, according to Companies House, LCF loaned money to just 12 companies.

The FSCS declared the firm had failed on 9 January 2020.

The Financial Times also reported last week that thirteen people, including a former UK energy minister, are being sued for £178m in connection with a suspected fraud at LCF.


How can Smooth Commercial Law help?

At Smooth Commercial Law, our team of solicitors have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing an increase in claims for mis-sold pensions, and have managed to secure compensation for many of our clients.

Should you have a claim, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.

You can contact our experienced team by calling 0800 046 9976 or by emailing


The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.