LCF Investors to take FSCS to court

Financial Advisers hit with £213m FCSC bill due to SIPP Claims

Investors in the collapsed London Capital & Finance launched a judicial review against the Financial Services Compensation

The judicial review comes after concerns that the majority of bondholders have not received any compensation after London Capital & Finance’s (LCF) collapse.

LCF entered administration in January 2019 and has been embroiled in a scandal ever since. Its 11,500 investors, who raised in excess of £237m for the firm, have been fighting for their money back.

The main issue for the FSCS has been in relation to how the money was raised. There has been much debate over the past year with regards to mini-bonds – an unregulated investment and, therefore, not protected by the scheme.

The FSCS has, however, been investigating other ways for compensation such as evidence of advice being given to bondholders by LCF. Earlier this year it announced it would compensate 135 investors in relation to 151 bonds invested following a transfer out of stocks and shares ISAs, which is a regulated activity. The compensation amounted to almost £2.7m.

The FSCS is still reviewing any possible advice claims but has previously warned many clients that they would not be eligible for compensation.

James Darbyshire, General Counsel at the FSCS, stated he appreciated LCF was a "complex and sensitive case" which affected a huge number of investors who were keen to know the FSCS’s decision.

Mr Darbyshire said:

FSCS has undertaken a thorough and wide-ranging investigation to determine whether LCF carried out any regulated activities that we might be able to compensate for.

This has included significant factual analysis and consideration of some complex legal and regulatory issues.

FSCS has been transparent and cooperative in discussing the legal issues with the investors and will continue to do so.

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 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.

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.