Investors in collapsed London Capital & Finance who are relying on claims for misleading advice to receive compensation could begin receiving decisions this month, the Financial Services Compensation Scheme has said.
In an update today (May 5) the statutory lifeboat fund said it had reviewed almost a million pieces of evidence in an attempt to determine which customers had been given misleading advice by the collapsed mini-bond provider.
The FSCS now expects to begin issuing decisions on London Capital & Finance claims relating to misleading advice before the end of this month, with plans to complete the process by the end of September.
But whilst some investors will have been given misleading advice and therefore qualify for compensation, the lifeboat fund has stood by its warning that a large proportion of London Capital & Finance customers will not be eligible for recompenses on this basis.
We appreciate that this process has been a lengthy one, and that for many LCF customers the wait is not yet overCaroline RainbirdOnce a decision has been reached on each individual claim for misleading advice, the FSCS will send a letter to the investor confirming the outcome alongside a cheque if they are eligible for compensation.
Caroline Rainbird, chief executive at the FSCS, said: "Having spent time reviewing all of the information we have gathered, I am pleased that we are now in a position to look at individual claims and will start to issue decisions on those claims this month, thereby providing some certainty for LCF customers.
"We appreciate that this process has been a lengthy one, and that for many LCF customers the wait is not yet over.
"We want to reassure LCF customers that we are continuing to work tirelessly to bring this process to a conclusion and ensure that those customers who are entitled to compensation receive it."
Before it entered administration in January last year LCF raised in excess of £237m from more than 11,500 investors over the course of two years, and it has been embroiled in a scandal since.
The issue of compensation from the FSCS has been a matter of much debate over the past year as mini-bonds are unregulated investments and therefore not protected by the scheme.
In January the lifeboat body announced it would compensate a mere 159 investors who transferred their savings from external stocks and shares Isa accounts into LCF accounts - a regulated activity.
Earlier this year investors launched a judicial review against the FSCS amid concerns the majority of bondholders had not received any compensation.
If the investors lose their case against the compensation scheme the latter has agreed not to recover legal costs from the group, a move praised by the claimants' legal team.
rachel.mortimer@ft.com
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