The Financial Services Compensation Scheme has been contacted by more than 5,000 clients of failed mini-bond provider London Capital & Finance, as the life-boat scheme confirms it has held a "cooperative" meeting with the firm's marketing agent.
In an update published today (August 2) the FSCS confirmed 5,500 bondholders had completed the scheme's fact-finding questionnaire in the month since it went live.
Customers of LC&F, which fell into administration at the end of January putting the funds of more than 14,000 bondholders at risk, have been encouraged to complete the questionnaire as a means to helping the FSCS investigate the mini-bond provider.
In June the FSCS announced it had found evidence of misleading advice given to bondholders by Surge Financial Ltd, a marketing agent acting on behalf of LC&F.
As advising is a regulated activity this discovery opened up the possibility of eligible claims for compensation, despite the fact LC&F was not regulated to provide this service.
The FSCS said: "We are analysing the information provided and it is already helping our ongoing investigation into the nature and extent of any protected claims.
"We would encourage other investors to complete the form and remind them that this will in no way prejudice any future claim they may have with FSCS."
In today's update the FSCS also confirmed it had met with representatives of Surge Financial Ltd in a "cooperative" meeting, in which the marketing agent agreed to provide further information to aid the investigation.
But the FSCS has always maintained the process for determining grounds for compensation would be a long one, stating it would require more time and information before offering any assurances to investors.
The FSCS said: "Customers are reminded that coming to us directly will mean they get 100 per cent of the compensation that they are owed, up to our limit of £85,000, as we are a free service.
"As we still do not have all the information we need to start accepting claims, and this is a complex case, it will be some time until we are ready to make any further announcements on the process itself."
The update follows a pledge recently made by Jimmy Barber, chief operating officer at the FSCS, to encourage more consumers to access the service directly, with almost three quarters of the claims it currently receives made by claims management companies.
Speaking at a Treasury committee evidence session last month Mr Barber said about 70 per cent of the claims that reach the lifeboat scheme are submitted by CMCs, despite the service being free to use directly for consumers and CMCs often charging hefty fees of about 30 per cent.
Mr Barber said the FSCS was "working on" ensuring the public understood the protection offered by the scheme was free to use and claimants would receive 100 per cent of their compensation when contacting the service directly.
Last month the Financial Conduct Authority warned CMCs they would face regulatory action if they failed to legally process the data of LC&F clients, after it emerged some companies had been offered the opportunity to buy data belonging to clients of the failed mini-bond provider.
rachel.addison@ft.com
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