The Financial Services Compensation Scheme (FSCS) has said that it agreed to only recover its costs for the initial judicial review for the London Capital & Finance (LCF) case and that extending this would not be an appropriate use of levy funds.
Four of the LCF bondholders who are themselves representing the rest of the mini-bond provider’s investors, have won permission to take their case to the Court of Appeal following a High Court ruling against the bondholders.
However, the bondholders have said it looks unlikely, as things stand, that they will be able to take forward the appeal, due to the FSCS’s refusal to extend an existing costs agreement to any appeal.
In response, a spokesperson from the FSCS told Peer2Peer Finance News that it only agreed to recover costs for the initial judicial review, has been transparent about its position and believes extending the agreement on costs would not be an efficient use of levy funds.
When asked about how much the FSCS’ legal fees would amount to, the spokesperson said the “FSCS has addressed this issue in correspondence with the claimants’ solicitors” and that it has “nothing further to add to that.”
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“We have always been very open and transparent about our position on costs and have maintained the same position throughout this judicial review challenge,” the FSCS spokesperson said.
“We agreed not to recover our costs for the initial judicial review to help LCF bondholders seek access to justice by enabling their arguments to be heard by the court.
“There was a three-day court hearing in January this year where both sides’ arguments were explored in full by the judge, who decided in FSCS’s favour. We believe that extending our previous agreement on costs to an appeal by the claimants would not be an appropriate or efficient use of levy payers’ funds.”
The bondholders are seeking funding routes to fund the FSCS’s costs and said it’s attractive for third parties given that the judge has concluded that the appeal is arguable. They have said that crowdfunding is their preferred option.