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FSCS step closer to accepting LC&F compensation claims

The Financial Services Compensation Scheme is a step closer to accepting compensation claims from London Capital and Finance investors.

Surge, the marketing firm used by the collapsed mini-bond provider, has agreed to share information with the lifeboat fund.

The FSCS says “it will be some time until [it] is ready to make any further announcements on the process”, as it does not have all the information to start accepting claims.

“A cooperative meeting” between FSCS and Surge took place within the last month, an update published today reveals.

Surge, which is thought to have sourced and “advised” investors for LC&F has agreed to provide further information to help the FSCS investigation.

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An FSCS spokeswoman did not comment on the nature of information as the investigation is still ongoing.

However, bondholder communication from LC&F administrators Smith and Williamson showed that “the joint administrators do not yet have access to the call recordings database of calls between the LC&F or Surge employees and bondholders in relation to their investments.”

The administrators previously revealed that the FSCS is taking steps to secure call recordings.

Surge employees acted as representatives of LC&F and FSCS has already revealed its investigation found a “number of cases” where the marketing firm “gave advice” to investors.

Last month, FSCS said it was satisfied that LC&F “is vicariously liable for Surge’s actions”.

It deemed Surge, which is not regulated by the FCA, acted as an “LC&F agent with actual or ostensible authority”.

Surge took 25 per cent commission on investors funds, making some £60m.

The FSCS fact-finding questionnaire into how Surge employees recommended LC&F mini-bonds has been completed by almost half of the investors since it went live last month.

A total of 5,500 investors out of 11,500 investors have completed the survey.

The FSCS has encouraged the remaining bondholders to do the same.



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. I am baffled how unregulated Surge can offer “advice” to investors , and then the FSCS pick up the bill. Did Surge pay anything into the scheme from the 60 million they raked off ?

    • No, they didnt. They interestingly are allegedly supplying /advising/distributing a couple of other investment products…Blackmore Bonds, and Capital Bridge. It would be hard luck/coincidental/misfortune if one of these goes belly up, say in November this year. Poor old Surge….seem to get caught up in some unfortunate things. Google Domestic and General lawsuit.

  2. It’s simple Mark, someone has to be guilty as otherwise people will lose out. Truthfully some of them were victims, just not of advice. It is pretty much a poster child for regulatory failure, but if somehow a way can be found of compensating the victims and having the regulated industry pick the bill up then when the investigation into regulatory failure kicks off it’s less urgent as the investors themselves aren’t clamouring for justice.

  3. Anything which deducts 25% from the initial investment is likely to lead to a poor consumer outcome, presumably being unregulated there was no disclosure of commissions, if I were an investor I would have to be pretty stupid to want to lose a quarter of my money just to set up the investment.

    Once again somebody knew what was going on, did nothing, and we pay the bill.Maybe consumers should take some responsibility for their own actions, if it looks too good to be true then steer clear.

  4. I think its high time that we invoiced our clients separately for the FSCS bills we receive so they know the state of failure and why they are expected to bail out people and businesses who did daft things. I predict comments along the lines of: “its not fair!”

    • I had an existing client who approached me about investing money into this a couple of years ago on the basis of a guaranteed 8% return. The first thing I told him was if it sounds too good to be true it probably was. Second thing I told him was to steer clear as the scheme was not covered by the FSCS. He took my advice and left alone. I agree with other comments. It is almost as if the FCA is looking for ways to pay compensation to clear up its own failures and appease the general public.

  5. This is clearly a very messy situation but if evidence is uncovered which proves that Surge gave advice as defined under FSMA, then criminal charges should be brought against the senior managers and owners of Surge and LC&F as well as those who gave the advice.

    This will then give a clear message to anyone else out there operating a similar business model.

    I am sure we all feel sorry for the victims, but we can’t just allow the FSCS to pay out at the drop of a hat. There needs to be clear evidence that FSCS can take on these cases. We need the trade bodies to be onto this to protect all advisers who pay into the FSCS.

    Can they be made to produce the evidence they rely on to accept the firms to be in default?

    • Once again somebody knew what was going on, did nothing, and we pay the bill.Maybe consumers should take some responsibility for their own actions, if it looks too good to be true then steer clear.
      Geoff why do not honest advisers just ask for a breakdown of there costs if this firm shows up not paying it is unregulated nothing to do with me

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