The Financial Services Compensation Scheme has confirmed it is continuing to explore possible grounds for compensation for customers of a collapsed mini-bond provider, but warned the investigation could take "some time".
In an update published today (May 10) the lifeboat scheme encouraged investors in London Capital & Finance to register for updates on the FSCS website, as it continued to explore grounds for compensation with the Financial Conduct Authority, administrators and external legal counsel.
London Capital & Finance entered into administration at the end of January, putting the funds of more than 14,000 bondholders at risk.
The FSCS has previously said it will not accept claims from investors in London Capital & Finance because mini-bonds are unregulated investments and therefore not protected by the compensation scheme.
But last month the scheme confirmed it may be able to pay compensation to investors if the mini-bond provider was found to have provided advice, despite the fact it was not regulated to do so.
Whilst the FSCS maintains London Capital & Finance's core activity of issuing mini-bonds in the UK was not protected by the scheme, today it claimed there were "further issues that need examining".
The scheme is now focusing on whether there was any "regulated advising, arranging or other activities which may trigger our compensation".
The FSCS stated it also wants to "better understand" the nature of the relationship between London Capital & Finance and its marketing agent Surge Financial Ltd.
A FSCS spokesperson said: "It is clear that London Capital & Finance investors were badly let down so to help we want to be as transparent as possible over our process.
"By registering with us they will get regular updates on our investigation and this will be the best way for them to hear whether we believe there are grounds for compensation.
"This is a highly intricate case though, so we expect our investigation may take some time. We appreciate investors’ need for certainty so we can assure them that we are treating the case with the utmost urgency."
Last week a law firm representing some of the London Capital & Finance bondholders wrote to the FSCS urging it to consider whether the company carried out additional regulated activities, including "dealing in investments as principal" and "operating a collective investment scheme" in light of finding additional avenues for compensation.