London Capital & Finance (LCF) went into administration in January 2019, leaving over 11,000 investors with £237m in losses.
The Financial Services Compensation Scheme (FSCS) has been paying LCF investors compensation since April of last year, with further payments expected in the months ahead.
Here Peer2Peer Finance News summarises a short history of the payments.
In April last year, the FSCS announced it had finished reviewing all of the evidence received from LCF and Surge Financial, the marketing company LCF used, and had identified and contacted all LCF customers which it believed are eligible for FSCS compensation.
The FSCS said in total it had paid out £57.6m to 2,871 LCF investors who held 3,900 LCF bonds. The money was paid in redress for customers which the FSCS believed had been given bad advice but stopped short of offering further payments.
In the same month, the Treasury announced it would establish a scheme that provides 80 per cent of LCF bondholders’ initial investment up to a maximum of £68,000 and said it expected to pay out around £120m in compensation to about 8,800 people in total through this.
The FSCS has been administering the payout of compensation from the scheme, since it gained Royal Assent in October.
The organisation, which expects to have made all payments by 20 April 2022, started contacting LCF investors about compensation under the scheme in November last year.
It wrote to 1,000 bondholders with details on what they need to do to accept the offer, the payment terms and some calculation examples.
On 16 December, the FSCS said it has been paying compensation to LCF investors under the scheme for three weeks and so far had contacted over 7,750 people, issuing cheques for more than 10,000 bonds totalling £91m.
The FSCS said this equates to just over 84 per cent of eligible bondholders receiving compensation so far.
It said it was continuing to send out letters and cheques and expected at least another 200 bondholders to be contacted by the end of 2021, with the remaining offers involving more complex calculations.
This month, the FSCS said that it has contacted another 700 investors since mid-December and has just 700 more left.
In total, the FSCS has paid £105m to 8,500 people under the compensation scheme and said that everyone will receive their offer by 20 April.