FSCS set to shut £115m LCF compensation scheme

The FSCS is to close its compensation scheme for victims of the failed £237m mini-bond provider London Capital & Finance (LCF). The compensation body says that it will close the scheme, administered on behalf of the government, on 22 October. The FSCS says it has so far paid 99.5% of customers eligible for compensation. Many of the LCF bonds were invested in ISAs and SIPP although LCF itself was only partly regulated. In total £115m has been paid in compensation, well below the original amount invested by victims. The Financial Services Compensation Scheme said there were a “small number” of claims that have still not been paid. These may involve cases where the bondholder has died and next of kin cannot be contacted. The FSCS said it may be able to pay these missing victim claims in exceptional circumstances after 31 October but these would take longer to settle. Any cheques sent out can still be cashed as long as it is within six months of the issue date. More than 12,300 investors in LCF ‘mini-bonds’ faced collective losses of £237m when the firm failed in 2019, causing a national outcry. Many of the victims were on modest incomes but were lured in by promises of high returns for minimum risk by investing in ‘mini-bonds’ invested mainly in property firms. The FSCS initially rejected many claims as outside its remit as LCF was only partly regulated. Many of the bonds were kept, however, in ISAs and SIPPs which are regulated. Compensation was guaranteed after, in an unusual move, the government stepped in to fund a compensation scheme. In recent months it has emerged that some scammers have been targeting compensated bondholders with bogus investment offers. The FSCS can be contacted on 0800 091 0030.

FSCS set to shut £115m LCF compensation scheme

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