FSCS names two firms targeting LCF investors

FSCS names two firms targeting LCF investors

The Financial Services Compensation Scheme (FSCS) has named two companies suspected of trying to scam London, Capital & Finance (LCF) investors. 

In an update yesterday (April 28), the FSCS warned many LCF bondholders were still being approached by scammers. 

It said: “Fraudsters using the company names LC Holdings and Capital Finance are claiming to be able to get compensation for the full amount of your LCF investment. Both are scams, and there may well be others.”

It warned investors to be “very wary” of any emails, letters or calls claiming to be from LCF or someone else offering to help them get access to compensation. 

The FSCS said it has a policy of naming troublesome companies where it is shown evidence of this by bondholders. 

A spokesperson for the lifeboat scheme said: "In this case we have been contacted by bondholders who have been targeted and told that they can get back the remaining investment that hasn’t been compensated for under the government scheme – and then been asked to hand over money to the scammers."

They added: "LCF bondholders are often proactive in coming to FSCS with any issues. We signpost anyone who comes to us to the relevant authorities to report scams (e.g. Action Fraud) but we also do our best to keep our website and subscribers to the LCF page up to date, so if other bondholders are targeted by the same scammers they can hopefully be made aware that it’s a scam."

Payouts near completion

Earlier this month, the FSCS said it had paid compensation on 99 per cent of bonds impacted by the collapse of LCF ahead of the deadline on April 20.

At the time, it still had 88 bonds left and had paid out on 12,330 bonds, totalling more than £114mn. 

However, the lifeboat scheme told FTAdviser that as of April 26, it still had 30 bonds left to pay out on which were all for bondholders where addresses were out of date and the FSCS was waiting on documents to show evidence of their new address. 

“As soon as we get what we need, we verify the new details and send payment out,” a spokesperson said.

LCF collapsed in 2019 owing more than £230mn, putting the funds of some 14,000 bondholders at risk.

Individuals have six months to accept an offer of compensation otherwise they will give up their right to compensation unless there are exceptional circumstances.

The FCA’s handling of the collapse was branded “one of the largest conduct regulatory failures in decades” by the Treasury committee, which urged the FCA to implement a change in culture to protect consumers and financial markets.

A report by Dame Elizabeth Gloster published in December 2020 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".