Financial Services Compensation Scheme  

FSCS urges families of deceased LCF investors to come forward

FSCS urges families of deceased LCF investors to come forward
 

The Financial Services Compensation Scheme has issued a request for the families of deceased investors in London Capital & Finance to contact the lifeboat scheme.

In an update today (August 8), the FSCS said it is preparing to close the LCF compensation scheme that it has been administering on behalf of the government.

But some LCF bondholders have passed away without receiving any compensation from the FSCS, it said, and there are a small number that it has been unable to trace.

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“If you believe a family member invested in LCF and has since passed away without receiving any compensation from FSCS, please get in touch with us as soon as possible,” the FSCS said.

Payouts near completion

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that as of April 26, it still had 30 bonds left to pay out on which were all for bondholders where addresses were out of date and the FSCS was waiting on documents to show evidence of their new address.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