FSCS payouts to London Capital & Finance bondholders exceed £50.9m
The UK Financial Services Compensation Scheme (FSCS) today provided an update to customers of failed London Capital & Finance.
The body says it has now paid out just over £50.9 million in compensation to 2,584 LCF bondholders who held 3,440 LCF bonds. Of this amount, £12.8 million in compensation has been issued since the previous update provided in October.
“We want to reassure LCF customers that issuing decisions on these claims has remained a high priority for us throughout 2020, and we are continuing our work to assess the outstanding claims”, FSCS stated.
The Scheme promises to update on the next stage of this process early in the new year. In the meantime, customers are advised they do not need to take any action.
This year, alongside many smaller failures – such as Greyfriars Asset Management LLP and Pointon York Ltd – FSCS has seen more compensation pay-outs to customers resulting from the complex failure of London Capital & Finance (LCF). FSCS expects its total management expenses budget (i.e. the cost of running FSCS and of paying claims) for 2021/22 to be £83.2 million, which is an increase on the current budget. The increase in the forecast stems primarily from overall anticipated claims volumes being 38% higher than budgeted, with around 10,200 more claims than had been expected due to LCF pay-outs. In addition, FSCS has seen more complex claims which are costlier to process.
The failure of London Capital & Finance has triggered regulatory changes. Earlier in December, the Financial Conduct Authority (FCA) confirmed proposals to permanently ban the mass-marketing of speculative illiquid securities – including speculative mini-bonds – to retail investors.