The UK Financial Services Compensation Scheme (FSCS) announced recently that it has paid £50.9 million in compensation to investors who lost their money when London Capital & Finance collapsed. The FSCS has paid 2,584 investors to date but the mini-bond provider’s troubles resulted in major losses for about 12,000 investors.
Additional £12.8 million paid since October
Of the total amount paid to investors, £12.8 million was disbursed after the lifeboat system’s last update in October. The £236 million collapses of LCF, a mini-bond issuer, left around 12,000 investors stranded. A small number of investors have received compensation from the FSCS but a majority of bondholders are yet to hear if they can get any money back from the company.
The FSCS said that the better metrics come after it increased the number of staff working on LCF claims by 80%. This has helped in accelerating the speed of claims processing but the FSCS does not expect that all claims against the firm will be completed before 2021.
Some claimants still fighting to become eligible
The FSCS started the claim processing process after reviewing more than 1 million pieces of evidence in order to decide which customers were given misleading advice by the LCF. It also gained access to over 100,000 emails stored in the company’s email servers. The FSCS said that it had to review telephone calls because of which it had to double the number of people dedicated to the review. It also worked with Capita to develop artificial intelligence (AI) that could help them review over 700,000 phone calls.
If it had not employed AI, the lifeboat scheme could have only started paying claims by January 2021 and complete the process in one year. However, some claimants are still fighting for eligibility for getting compensation. They have asked the court to scrap a decision that did not include bonds issued by LCF after January 3, 2018 in regulated activity. The claimants say that they bought the bonds when they received assurance from LCF that they were covered by the lifeboat scheme.