The Financial Conduct Authority has extended the complaints deadline for London Capital & Finance investors until March 2022.
In its board minutes dated December 16 and published today, the FCA was briefed on several options for setting a time bar on LCF complaints about its handling of the investment scandal.
The board agreed that given the exceptional circumstances surrounding LCF, it would allow complaints to the FCA to be accepted until March 17, 2022.
The FCA is expected to pay compensation to LCF investors who complain about its handling of their case.
It follows an independent investigation by Dame Elizabeth Gloster published in December 2020, which warned the FCA had shown "significant gaps and weaknesses" in its policies and practices ahead of LCF's collapse.
Following this the Treasury committee launched its own inquiry into the FCA’s regulation of LCF in February 2021 in order to examine the changes that have been made since the publication of her report, and to make further recommendations to the FCA and HM Treasury.
In the regulator’s minutes, it noted that the 12-months complaint period had been written into the complaints scheme and investors looking to complain would have had enough knowledge to do so following Gloster's report.
However, the board discussed the "exceptional aspects" of the LCF case and allowed an extension of three months within which to accept complaints.
The City watchdog noted that complaints notified after this would only be accepted if there were exceptional circumstances for the delay.
The whole saga dates back to December 2018, when the regulator directed LCF to withdraw its promotional material for mini-bonds as it was deemed “misleading, not fair and unclear” and the following month, LCF entered administration.
Meanwhile, last April, the government set up a compensation scheme for LCF victims through which it will reimburse individual bondholders up to £68,000.
The government-funded scheme will be available to all LCF bondholders who have not already received compensation from the Financial Services Compensation Scheme (FSCS) and represents 80 per cent of the compensation they would have received had they been eligible for FSCS protection.
LCF entered administration in 2019 owing more than £230m and putting the funds of some 14,000 bondholders at risk.
Where bondholders have received interest payments from LCF or distributions from the administrators, Smith & Williamson, these will be deducted from the amount of compensation payable.
The scheme launched in November and the FSCS confirmed it would be administering the redress scheme for LCF investors on behalf of the government.
At the time, it said all LCF bondholders would be contacted with an offer of compensation by April 20, 2022.
sonia.rach@ft.com
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