FSCS Sets To Compensate Victims of the Botched LCF Scheme

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The Financial Services Compensation Scheme has announced that it will launch a compensation scheme to reimburse victims of the failed London Capital & Finance Scheme.

The agency stated that it had identified and contacted about 1,000 of the victims and hopes to send the compensation to the eligible customers within 5 months. The FSCS also stated how the affected customers can obtain their compensation, including the payment terms and the requirements for accepting the offer. It also includes some calculation examples for the compensation plan.

The FSCS Sets To Compensate More Bondholders

After the £236 million collapse of the mini-bond issuer, about 12,000 investors suffered severe losses, as most of their invested funds could not be retrieved.

Only a small number of the investors were able to get their funds back at the time, leaving a vast majority of them seeking legal action against the firm.

The FSCS stepped into the situation and compensated some investors who claimed that they were wrongly advised regarding the true nature of the investment. According to LCF, some of the Strand customers were wrongly advised by independent financial advisers, as they transferred assets to the firm.

The FSCS has taken some time to conclude on the compensation plans. It started by reviewing almost a million pieces of evidence to verify whether some of the customers were provided with wrong information about the investment. The agency had to extend the deadline of the investigation and reviewed additional 100,000 complaints sent to its email server.

The Bondholders To Receive 80% Of Their Investment

The commission also mentioned that the scheme is accessible to all individual bondholders who are yet to receive compensation from the FSCS. According to the terms of the scheme, 80% of the compensation they would have received will be paid by the government. However, the reimbursement will be a maximum of £68,000 for an eligible individual.

When the contacted bondholders accept the compensation offered under the scheme, the agency will automatically be given all the rights they might have against FSCS. It means that the bondholders will not be able to make any further claims against the company in the event of insolvency.

The FSCS also stated that those who want to receive the full amount of the principal investment can reject the 80% offer when the agency contacts them by April 2022.

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