To ask the Chancellor of the Exchequer, what steps his Department is taking to support people that have lost savings as a result of the collapse of London Capital and Finance.
10 March 2020
The administrators for London Capital & Finance (LCF) are currently estimating recoveries for investors affected by LCF’s failure. The Financial Services Compensation Scheme (FSCS), as the compensation scheme of last resort, can only provide compensation for claims connected with certain types of regulated activities.
The FSCS has been working closely with LCF’s administrators and the Financial Conduct Authority to understand more about LCF’s activities. This investigation led FSCS to announce certain key decisions in relation to LCF in January 2020. First, the FSCS has announced it will protect LCF bondholders who switched from stocks and shares ISAs to LCF bonds. The FSCS has now paid £2.7m compensation to these LCF customers. Second, the FSCS has announced it is unable to protect LCF bondholders who dealt with LCF before it was authorised to carry out financial services business. The FSCS will contact these LCF customers to confirm this. Third, the FSCS has said that there will be some LCF customers who were given misleading advice by LCF, and who will have valid claims for compensation. The FSCS will provide a further communication with details of when and how customers in this category can submit their claims. The FSCS will aim to start reviewing these advice claims in the first quarter of 2020.
The FSCS will provide a further update by the end of March outlining the next steps. In the meantime LCF customers do not need to take any action. Further information can be found at https://www.fscs.org.uk/failed-firms/lcf/.