The Financial Services Compensation Scheme (FSCS) has paid the first batch of claims relating to victims of London Capital & Finance (LCF).
LCF mis-sold approximately £237m worth of mini-bonds to more than 11,600 retail investors.
Around 135 customers collectively holding 151 bonds received compensation, totalling to £2.7m. They were the ones who transferred their money out of stocks and shares Isas to invest in LCF.
The lifeboat scheme said it has made the payments automatically without needing the customers to submit an application, because Isas are regulated.
The FSCS said last months that it would be able to protect 159 victims – representing around 1% of those caught up in the scandal.
The remaining 24 clients should receive letters by the 24 February, the scheme said, and if they don’t, they should get in touch.
But the lifeboat scheme confirmed, in January, that it won’t be able to reimburse 283 other victims because they started dealing with LCF before it became an authorised firm.
Not over yet
More people, however, are in line to receive compensation.
“[The] FSCS has concluded there will be some customers who were given misleading advice by LCF and so have valid claims for compensation,” the lifeboat scheme said.
“In relation to advice claims, we are continuing to review the evidence we hold. At this stage, customers do not need to submit a claim to FSCS. We will provide a further update to customers by the end of March 2020.”
Caroline Rainbird, chief executive of the FSCS, said: “We appreciate that this is a difficult time for the majority of LCF’s customers who are still waiting to find out if they are entitled to compensation.
“[The] FSCS is making progress in finalising its arrangements for reviewing advice claims and is committed to ensuring the process is as quick and as easy as possible for customers.”
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