A number of residents in my area had invested in London Capital and Finance (LCF) mini-bonds, a scheme that many believed was under protection of the United Kingdom's Financial Compensation Scheme.
Sadly mini-bonds did not fall under the scheme and so when the company collapsed, investors were left in limbo, unsure where to turn with no real chance to get their money back. A number of MPs including myself have regularly been raising individual constituent issues with the FCS, Treasury and with the Insolvency Service about the issue and I understand that finally some positive movement is taking place.
I understand the FSCS are now in the process of paying out some compensation to a number of LCF customers in relation to the mini bonds, while it is only a fraction of what was invested, the SCS has no duty to cover unregulated products, any chase up would therefore ordinarily be carried out through civil legal action against the company or the company's directors.
With this in mind I want to ensure any local resident who felt they were given misleading advice by LCF has been in touch with the FSCS with their individual case concerns. While no figure has been given for the number of possible claimants and not all will be eligible for the compensation the FSCS is trying to make the process as quickly as easy as possible.
For any resident who finds out they are not covered by the scheme, there may still be hope for some recovery of finances through the Elizabeth Gloucester investigation, if the Financial Conduct Authority is deemed to have failed in its duty. However the full report from the investigation is not expected until summer of this year. I know this investigation is of particular importance to investors who spent money with LCF prior to June 2016, before the company had been authorised to sell financial products by the FCA.
I will keep on at this for you to try to tighten rules around unregulated products being sold by companies who are regulated to sell financial products, to ensure the FCA are checking that websites containing their logo are selling regulated products and that communication is improved in the event of insolvency of a company.