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LCF compensation scheme to close end of October

LCF compensation scheme to close end of October
 

The scheme to compensate investors who lost money in the London Capital & Finance scandal will close at the end of October, the Financial Service Compensation Scheme has announced.

In a statement today (October 6), the FSCS said it will close the scheme on October 31, but some claims will be paid after that date.

“There are a small number of claims that we have still not been able to pay where we have requested information multiple times but had no reply or where the bondholder has passed away and we have not been able to locate their next of kin,” the FSCS said.

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In those cases, the lifeboat may still be able to pay compensation, however it may take it longer to process the claims and return cash.

Some 99.5 per cent of customers eligible for compensation have been paid since the scheme began, with £115mn paid out in total.

LCF scandal

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

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...made in handling this case” and that it was committed to implementing each of the recommendations Gloster made in her review.

sally.hickey@ft.com