Investor compensation scheme for failed minibond issuer LC&F goes live

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Investor compensation scheme for failed minibond issuer LC&F goes live

The UK's HM Treasury has launched a compensation scheme to pay out an estimated £120m to investors in London Capital & Finance, which impacted 12,000 clients in the wake of a minibond scandal.

The government department said that the scheme would compensate bondholders by up to 80% of their investment in LC&F, to a maximum of £68,000 each.

The company collapsed in January 2019, leaving investors who bought its high-interest debt securities, known as minibonds, with a £236m loss.

FSCS will contact eligible bondholders directly with details of their compensation payment and bondholders do not need to do anything to claim compensation from the Scheme."

The compensation scheme launched on 3 November 2021 and the Financial Services Compensation Scheme (FSCS) is administering it on behalf of the government.

It said the scheme is available for bondholders with an outstanding investment with LCF which has not already been compensated by the Financial Services Compensation Scheme (FSCS).

FSCS will contact eligible bondholders directly with details of their compensation payment and bondholders do not need to do anything to claim compensation from the Scheme.

Investors are also eligible to receive compensation if they have received some compensation from FSCS for LCF bonds, but they still have an outstanding LCF bond for which they have not received any compensation.

Individuals in this position may still be eligible for the Scheme, the Treasury said, provided they have received less than £85,000 from FSCS.

They may also be eligible to receive compensation if they are representing the estate of someone who would have been eligible under the scheme.

FSCS will begin contacting eligible bondholders shortly after the launch of the scheme with details of their compensation payment, aiming to contact all bondholders by 20 April 2022.

Bondholders have six months to accept their offer of compensation. Bondholders who have not accepted their offer of compensation during this time will forfeit their right to compensation under the Scheme unless there are exceptional circumstances.