More LCF investors may be set for compensation after new evidence emerges
The FSCS is in the process of paying out claims against the collapsed mini-bond provider.
New evidence in the London Capital & Finance (LCF) scandal could see the Financial Services Compensation Scheme (FSCS) paying out more compensation to investors than first expected.
The FSCS is currently in the process of paying out claims against former mini-bond provider, LCF, for misleading financial advice. Now, the FSCS has stated that new evidence has come to light which could see more customers becoming eligible for compensation.
So far, the FSCS have issued 281 decisions and paid more than £5m in compensation to LCF investors. The lifeboat fund had initially aimed to ruled on the majority of claims by September 2020.
New emails show evidence of further liability
Last week, however, the FSCS gained access to a further 100,000 emails held within LCF’s email server. This has, it said, provided further proof of liability.
The FSCS stated:
During June, we gained access to an additional 100,000 emails held within LCF’s email server. This evidence provides more information for us to assess.
While we had expected to reach decisions on the majority of LCF claims by the end of September, assessing this additional information will now extend the timeframe for processing claims. This new evidence is also likely to lead to an increase in the number of LCF customers that will be eligible for compensation.
We are recalculating the timeframe for processing claims and will provide an update in our next communication before the end of July.
In March 2020, LCF investors took the FSCS to court after concerns the majority of bondholders have not received any compensation yet.
James Darbyshire, General Counsel at the FSCS, stated at the time that 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.
Who were London Capital & Finance?
London Capital & Finance, a mini-bond firm, 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 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.
Have you been affected by the London & Capital Finance mis-selling?
Have you been a victim of London Capital & Finance’s financial mis-selling? Smooth Commercial Law may be able to help you claim compensation.
At Smooth Commercial Law, our team of experts have experience in dealing with a whole manner of claims that arise from negligent, fraudulent and/or unsuitable financial advice, including unsuitable transfers from pensions. We are seeing an increase in claims for mis-sold pensions and unsuitable investments, and have managed to secure compensation for many of our clients.
Should you have a claim for negligent financial advice, 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.