Financial Services Compensation Scheme  

FSCS warns LCF bondholders about scam

FSCS warns LCF bondholders about scam
(Tara Winstead/Pexels)

The Financial Services Compensation Scheme has sent a warning to LCF bondholders after one individual received a fraudulent letter.

In an email on Friday (May 27), the FSCS said a LCF bondholder had received a fraudulent letter claiming to be from Trading Standards.

The lifeboat scheme said the names Henry Johnson and Daniel Thomas were used by the scammers.

“The letter did not mention LCF directly, but when the bondholder rang the phone number on the letter, the person they spoke to said that they were entitled to more money for their investment in London Capital and Finance and that they must act quickly to get it back,” the email said.

The FSCS said the Chartered Trading Standards Institute (CTSI) had confirmed the letter is a scam.

It warned bondholders to be wary of any emails, letters or calls claiming to be from LCF or someone else offering access to compensation.

It urged bondholders to contact the FSCS directly using the information on its website.

“Scammers will try anything to try and get money from you," it said. “Please be vigilant.”

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that as of April 26, it still had 30 bonds left to pay out on which were all for bondholders where addresses were out of date and the FSCS was waiting on documents to show evidence of their new address.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

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 Gloster made in her review.

sally.hickey@ft.com