The Financial Services Compensation Scheme (FSCS) has started paying out compensation to the victims of London Capital & Finance (LCF).
The lifeboat scheme said the redress has been given to those who received misleading advice for the defunct investment firm.
“So far FSCS has issued 281 decisions and paid £5,155,344 ($6,431,450, €5,698,000) in compensation to LCF customers,” it said.
“We appreciate that this has been an extremely difficult and stressful time for LCF customers. For that reason, FSCS has transformed its standard claims process to make the process as easy as possible.”
The LCF case was so widespread and complicated that the lifeboat scheme admitted it had to create a specific unit to deal with the claims.
“We have set up a specialist team, focussed on reviewing advice claims on a case-by-case basis. We’ve gathered the evidence ourselves, removing the need for customers to provide this or to complete an application form,” the FSCS added.
“We’ve not required LCF customers to obtain additional information from third parties in support of their claim. These changes have enabled us to review claims without customers needing to take any action.”
The lifeboat scheme continued: “During June, we gained access to an additional 100,000 emails held within LCF’s email server. This evidence provides more information for us to assess.”
But by recovering additional evidence, the FSCS is going to need more time to reach decisions for all claims, extending its original September 2020 deadline.
“This new evidence is also likely to lead to an increase in the number of LCF customers that will be eligible for compensation.
“We are recalculating the timeframe for processing claims and will provide an update in our next communication before the end of July.
“Having worked hard to simplify the process as much as possible for LCF customers, we are pleased we have now started paying compensation.”
The FSCS came under fire in January 2020, when it said it would have only compensated 159 bondholders at the time.
This prompted a large portion of the over 11,600 victims to take legal action against the scheme.
The Financial Reporting Council has also stepped in the LCF case as it said it was investigating three firms involved in the auditing of the investment company between 2015 and 2017, namely Oliver Clive & Co, PwC and EY.