FCA won’t pay any more compensation to LCF victims
The City regulator has rejected a recommendation made by the Financial Regulators Complaints Commissioner (FRCC) that it should pay more compensation to victims of the London Capital & Finance (LCF) investment scandal.
Following an independent review, the FRCC recommended that the Financial Conduct Authority (FCA) should scrap its previous redress decisions and re-run its compensation process.
Last month the FRCC published a report looking into the FCA’s response to the LCF scandal. It found that the regulator’s approach to compensatory payments was “unjustified and does not stand up to scrutiny”.
The FRCC concluded that the FCA should have picked up on LCF’s misleading marketing and advertising sooner, and that it failed in its authorisation and supervision of LCF. As a result, it should re-decide the LCF cases in line with a new, adequately justified test.
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To date, the FCA has paid just £34,020 to four people who complained about its handling of the LCF crisis.
By comparison, £58.3m has been paid out by the Financial Services Compensation Scheme and £109.4m has been paid by the government from a special pot set up to compensate victims of the scandal.
The FCA has claimed that awarding more compensation to LCF investors would set a precedent for other similar complaints.
The FCA has been contacted for comment.
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