The UK Financial Services Compensation Scheme (FSCS) today provided an update on the London Capital & Finance matter.

The Scheme says it has now paid out just over £56.3 million in compensation to 2,878 LCF bondholders who held 3,815 LCF bonds. This compares with just over £50.9 million in compensation paid out to 2,584 LCF bondholders as per the update released in December 2020.

“We are close to having identified and paid all LCF customers who we believe are eligible for FSCS compensation” – FSCS said.

Also today, FSCS said it is pleased that the court has reached a decision on the LCF judicial review, and that the court agreed with FSCS’s decision.

Due to the ruling, FSCS is still able to pay compensation to LCF bondholders who received regulated advice from LCF, and the compensation payments that FSCS has made so far are not affected by the court’s decision.

The court’s decision means FSCS can move forward and give clarity to the remaining bondholders who have not yet heard from FSCS as soon as possible. If you are still waiting for a decision you do not need to contact FSCS or take any action. The Scheme expeccts to be able to give the next update in three weeks’ time.

As a public body, FSCS’s decisions can be challenged by a judicial review in court. In this case, a group of LCF bondholders (the claimants) disagreed with FSCS’s decision that the issuing of bonds by LCF after 3 January 2018 was not a regulated activity.

FSCS’s decision meant that bondholders who took out bonds with LCF without another regulated activity taking place, e.g. without being advised by LCF to invest in their bonds, were unable to receive any compensation from FSCS under the rules set out by the regulators.

The claimants wanted the court to overrule FSCS’s decision, but the court has now rejected the claimants’ legal arguments.