Financial Services Compensation Scheme  

FSCS warns LCF investors about scammers

FSCS warns LCF investors about scammers

The Financial Services Compensation Scheme (FSCS) has warned London, Capital & Finance (LCF) investors about being contacted by scammers via social media.

In an update on its website, published yesterday (December 20), the lifeboat scheme said there had been reports over the weekend that LCF bondholders were being contacted through social media or called by individuals who asked questions about compensation and offered help.

The FSCS has told investors to be wary about this type of contact as it could be a scam.

Article continues after advert

The FSCS stated: “If you haven’t yet received your compensation, there is nothing you need to do. Please be wary of any contact, especially through social media, as it may be a scam. 

“FSCS does not use social media to speak to customers directly about their claims or compensation.”

Last month (November 3), the Financial Services Compensation Scheme confirmed it will administer the LCF redress scheme on behalf of the government.

Bondholders will be contacted by the lifeboat scheme by April 20, 2022.

The scheme launched in November after it was first announced in April that the government would compensate 80 per cent of bondholders’ principal investment in eligible bonds, up to a maximum of £68,000.

But this will be reduced if they have received interest on their bonds, distributions from the insolvency administrators (Smith & Williamson) or prior compensation from the FSCS.

Where bondholders accept the offer of compensation under the scheme, FSCS will automatically take over all remaining rights they might have against LCF. This means that bondholders won’t be able to make their own claim in the insolvency of LCF, except in certain circumstances.

Individuals have six months to accept an offer of compensation otherwise they will give up their right to compensation.

LCF entered administration in 2019 owing more than £230m and putting the funds of some 14,000 bondholders at risk.

A report by Dame Elizabeth Gloster published in December found the FCA had shown "significant gaps and weaknesses" in its policies and practices ahead of LCF's collapse.

The investigation also found the regulator could have done more to protect investors in LCF and its handling of information from third parties regarding the business was "wholly deficient".

The FCA said it was “very sorry for the errors we made in our handling of this case” and that it was committed to implementing each of the recommendations Dame Gloster made in her review.

In June, the Treasury committee labelled the Financial Conduct Authority’s handling of London Capital and Finance “one of the largest conduct regulatory failures in decades” and urged the FCA to implement a change in culture to protect consumers and financial markets.

amy.austin@ft.com

What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know