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FSCS launches registration process for London Capital & Finance investors

The Financial Services Compensation Scheme has today urged London Capital and Finance customers to register for updates as it explores possible grounds for compensation.

 

A total 11,500 investors lost £237m after LC&F fell into default in January with some investors blaming the FCA’s investigation of the firm for its collapse.

 

In the update the FSCS says it is keen to ensure LCF customers are kept informed as it explores whether there are grounds for compensation.

 

The promotional materials that have been reviewed stated that the LCF mini-bonds were not FSCS protected but the lifeboat fund says it is now investigating whether regulated activities were in fact carried out.

 

If regulated activity was carried out, then this would give rise to a claim and the FSCS says it needs to have a better understanding of the relationship between LCF and Surge Financial Ltd.

 

A spokesperson for FSCS says: “It is clear that LCF investors were badly let down so to help we want to be as transparent as possible over our process. By registering with us they will get regular updates on our investigation and this will be the best way for them to hear whether we believe there are grounds for compensation.

 

“This is a highly intricate case though, so we expect our investigation may take some time. We appreciate investors’ need for certainty so we can assure them that we are treating the case with the utmost urgency.” 

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Pepole don’t have enough cash to pay for their inflated expectations and precious “lifestyles”.
    People make a mistake chasing rainbows.
    People lose money.
    People weep.
    People weep more vociferously in the media and politicians are drawn in.
    Politicians blame and then lean on FCA.
    FCA leans on FSCS.
    FSCS contrive a way to make everything lovely again.
    I get to pay for the original mistake someone else made, and someone else profited from.

    Isn’t modern life bloomin’ marvellous.

    I’d open a bottle of champagne and celebrate how bloomin’ good it is – except I can’t afford any.

  2. “The promotional materials that have been reviewed stated that the LCF mini-bonds were not FSCS protected but the lifeboat fund says it is now investigating whether regulated activities were in fact carried out.

    If regulated activity was carried out, then this would give rise to a claim and the FSCS says it needs to have a better understanding of the relationship between LCF and Surge Financial Ltd.”

    Is it within the authority of the FSCS to make a determination about whether advice was given? Is their remit to be a pro-active investigative body in this respect? If so then that makes them investigator, jury and judge. And, barring some obvious systemic failure, surely it would be a matter of a detailed investigation of each individual case. That costs a lot of money and guess who pays…

  3. To paraphrase, can we stick the compensation for this debacle on FSCS despite it being not eligible for this protection and this being specifically excluded in the paperwork.

    What is therefore to stop my local shop owner recommending mini bonds when someone buys a can of Vimto and once this is done the FSCS agreeing to compensate his customers as “advice was given” even though the person doing the advising had no authority to do so.

    • Unless your local shop owner happens to be authorised by the FCA that seems a rather fallacious comparison.

      With LCF, it seems a rather unusual combination of facts and section 20 FSMA are conspiring to potentially deliver an unexpected – but not legally wrong – outcome.

    • It’s not an unreasonable point but the technical difference is that LCF were FCA registered (and had advising permissions) but the shop owner doesn’t.

  4. This is laughable and makes every ISA seriously consider their future. What is the point of regulation if the FSCS will step in on non-regulated products.

    The public have to take responsibility for their OWN actions, just like IFA’s do for their advice.

    As much as I feel sorry for the individuals who lost money, had they received advice from an IFA they would have been educated about risk and reward and where this product sat on the risk scale.

    This also makes me wonder if a claim will ever be brought against the journalist profession who use their limited knowledge and get very close to the grey area of advice / sharing knowledge.

    We, as IFA’s, can’t breath without the threat of a claim, and they wonder why there is no goodwill left in our industry.

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