FSCS payouts to London Capital & Finance customers top £38.1M
The UK Financial Services Compensation Scheme (FSCS) today published an update for customers of failed London Capital & Finance.
The Scheme says that, to date, it has paid out more than £38.1 million in compensation to LCF customers and is continuing our work to assess the outstanding claims. The amount compares with just over £20 million in compensation paid out as of August 27, 2020.
In January 2020, following an initial review of call recordings and emails to customers, FSCS concluded that some customers were given misleading advice by LCF and that these customers would have valid claims for compensation.
In the months leading up to this, FSCS had been investigating whether there were grounds for compensation. This work focused on the relationship between LCF and Surge Financial Ltd, an online marketing company which acted on behalf of LCF. The Scheme considered the extent to which either company may have been carrying out regulated advising, arranging or other activities that could give rise to some eligible claims for compensation.
Once FSCS had established the firm had given misleading advice, the Scheme focused on gathering all the information and evidence it could, from sources including Surge and emails held within LCF’s email server. In the end, FSCS had more than a million pieces of evidence to analyse and consider.
FSCS worked with Capita to create a solution that would enable it to review 700,000 telephone call recordings. To reduce how long LCF customers would have to wait, FSCS concluded that the use of Artificial Intelligence (AI) would be the best approach. Without the use of AI, it would have taken FSCS considerably longer to complete this process manually.
FSCS estimates that it would not have been able to start paying claims until January 2021, which would have meant possibly not being in a position to complete this work until 2022, about three years after the firm failed. The body decided this timescale was not acceptable given LCF customers had already been waiting many months for FSCS to be able to confirm the outcome of their claim.
Due to the sheer volume of evidence that needed to be reviewed for each claim, in August of this year, FSCS increased the size of this specialist team by nearly 80%.
FSCS notes that once it has explained its decision, LCF customers can ask to review the calls and evidence related to their specific claim.
“If they still believe they may have an eligible claim under our rules and wish to provide additional evidence they would like us to consider, they can do so at this stage”, FSCS says.