FSCS set to reject 'large proportion' of LCF claims

The Financial Services Compensation Scheme has warned that it will reject many claims relating to the failed £236m mini-bond firm London Capital & Finance (LCF). The FSCS reported today that it will be begin adjudicating on LCF claims relating to ‘misleading advice’ before the end of this month - with all claims due to be reviewed by the end of September. However, the FSCS said that while those who were given misleading advice will be entitled to compensation “a large proportion” of LCF claimants will get nothing. It said today: “Whilst FSCS is aware there are some customers who were given misleading advice, and will therefore be entitled to compensation, FSCS still expects that a large proportion of LCF customers will not be eligible for compensation on this basis.” The news will disappoint many investors in LCF who put money into what they believed were relatively safe bonds, touted as being suitable for investment in a SIPP. A total of 11,600 investors were hit by the £236m collapse of LCF which has resulted in a wave of complaints, claims and litigation, with some accusing the FSCS and the FCA of dragging their feet. Earlier this year the Financial Services Compensation Scheme made the first pay-outs of just under £2.7m to 135 victims of the collapse however many thousands of other victims remained in limbo, awaiting review of their cases by the FSCS. Compensation claims were initially declined because the mini-bonds were constructed by LCF as loans rather than investments and are potentially outside the remit of the FSCS. The FSCS also said earlier this year that it could not help 283 victims because they became customers before the firm was authorised in June 2016. It is not yet known how many claims will be approved but the FSCS says it has now started the process of reviewing individual claims. FSCS has set up a team to deal with LCF claims on case-by-case basis, it said. Once a decision has been reached on an individual claim, FSCS will send a letter to the customer to confirm the outcome, and if they are eligible for compensation, a cheque will be sent alongside. The LCF page on the FSCS's website is being updated on a regular basis with the latest information. Caroline Rainbird, FSCS's chief executive, 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."

FSCS set to reject 'large proportion' of LCF claims

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