The Financial Services Compensation (FSCS) is sending letters to London Capital & Finance (LCF) bondholders as it has been put in charge of the government’s LCF compensation scheme.
All eligible victims will receive an offer from the lifeboat scheme within six months – by 20 April 2022.
The FSCS said it expects compensation payments to begin later in November 2021.
According to the government scheme, bondholders will receive up to 80% of their original investment.
The official document sets out that:
- Any interest payments already received will be deducted from the initial sum;
- A 20% reduction will then be applied to the remaining funds;
- Following this, the FSCS will apply a compensation cap of £68,000 ($93,610, €80,442) – meaning that anyone with a bigger sum will only receive £68,000; and
- Any distribution already paid out by LCF administrators Smith & Williamson (S&W) will then be taken out as well.
Victims blame the FCA
One of the bondholders told International Adviser that, while they are happy this saga is coming to an end after nearly three years, there is a degree of disappointment.
They said: “Overall I feel [the compensation calculation] is quite reasonable. But it’s disappointing that the Financial Conduct Authority have not suffered any financial penalty as a result of their failings. A modicum of relief but, as this was a scam, I still feel short changed by the FSCS.
“It means we finally get to draw a line under this unfortunate experience and get on with our lives, and accept the 80% compensation of what we invested minus interest and the measly amount we have already been paid by S&W, and learn to never trust FSCS again who seem to never take responsibility for their failure and remain unaccountable.
“We will not receive the level of compensation that we deserve for the FCA’s lamentable regulatory failure.
“There were many occasions when the FCA failed to take appropriate action, and if the FCA had taken a better course of action on just some of those occasions, then this should have resulted in London Capital & Finance’s investment offering being withdrawn much sooner.
“I consider the FCA to be the primary cause of my loss, and therefore the government and the FCA should at least pay compensation at the same level as the FSCS. Relieved, of course, that we are due to get 80% back, but why not 100% up to £85,000? Bittersweet that some were compensated fully for receiving ‘advice’ prior to investing and many thousands didn’t receive a penny the first time around.”
Retribution
The LCF victim told IA that they hope the people behind LCF will be brought to justice as well.
“Many bondholders have waited two years for compensation, and they won’t believe it’s happened till the money is in their bank accounts,” they added. “It would be nice to see the numerous rogues that operated LCF and the many corporations that stood by while it was happening receive prison sentences, financial fines and a public naming and shaming.
“For many this news will come as a huge relief as they can begin to move on with their lives. Sadly, for some, the news arrived too late. The FCA have acted appallingly throughout this saga, changing the goalposts to suit themselves and refusing to acknowledge any blame whatsoever.
“Because of the FCA’s incompetence, many will not see the full return of their investment to which they should be entitled. The way this has been handled is a disgrace.
“The [acronyms] FCA and FSCS now carry no reassurance for me, [my] family and friends. Their failures were despicable and so cannot be trusted. Through independent enquiries and challenges, the Treasury has recognised the damage done and the partial compensation will alleviate some of the pain caused by our losses.
“Many of us, like me, will accept whatever we get because the past two years have created so much mental and emotional suffering. I still remain hopeful that the perpetrators of the fraud will face justice, and those who failed to protect as per their remit will similarly suffer the consequences with loss of role.”
