The FSCS is to shut its compensation scheme for victims of the failed £237m mini-bond supplier London Capital & Finance (LCF).
The compensation physique says that it’s going to shut the scheme, administered on behalf of the federal government, on 22 October.
The FSCS says it has to this point paid 99.5% of consumers eligible for compensation.
In complete £115m has been paid out via the government-backed scheme with an estimated £173m in compensation paid to LCF victims in complete.
The figures recommend victims have acquired, on common, simply over 70% of the investments they misplaced.
The quantity paid out to victims was decrease than the quantity misplaced for a wide range of causes, primarily as a consequence of caps on compensation per declare.
Along with the £115m paid via the federal government scheme, the FSCS paid out round £58m to bondholders straight previous to the federal government scheme. This included these eligible underneath the FSCS’s customary compensation guidelines.
Nonetheless, the FSCS’s guidelines capped the quantity compensated to £85,000 per declare. The federal government scheme additionally had a cap of 80% of the bondholders’ funding, as much as a £68,000 restrict. Losses above the caps weren’t compensated.
The Monetary Companies Compensation Scheme stated there have been a “small quantity” of claims which have nonetheless not been paid. These could contain circumstances the place the bondholder has died and subsequent of kin can’t be contacted.
The FSCS stated it could possibly pay these lacking sufferer claims in distinctive circumstances after 31 October however these would take longer to settle.
Any cheques despatched out can nonetheless be cashed so long as it’s inside six months of the difficulty date.
Greater than 12,300 traders in LCF ‘mini-bonds’ confronted collective losses of £237m when the agency failed in 2019, inflicting a nationwide outcry.
Most of the victims have been on modest incomes however have been lured in by guarantees of excessive returns for minimal threat by investing in ‘mini-bonds’ invested primarily in property corporations. The FSCS initially rejected many claims as exterior its remit as LCF was solely partly regulated.
Most of the bonds have been saved, nevertheless, in ISAs and SIPPs that are regulated. Compensation was assured after, in an uncommon transfer, the federal government stepped in to fund a compensation scheme.
In current months it has emerged that some scammers have been concentrating on compensated bondholders with bogus funding presents.
The FSCS may be contacted on 0800 091 0030.
• Editor’s Word: story up to date so as to add extra element of compensation quantities.
