Treasury announces further compensation scheme for LCF investors

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Shortly after the release of the Gloster report into the FCA's failings over London Capital & Finance, the Treasury announced that it would announce a scheme to compensate London Capital & Finance bondholders... maybe.

Taking into account the various channels through which people affected can seek compensation, the government will… set up a scheme to assess whether there is a justification for further one-off compensation payments in certain circumstances for some LCF bondholders.

John Glen, Economic Secretary to the Treasury

"Various channels" is a reference to the essentially random basis on which the Government has paid out compensation to LCF investors so far.

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Emboldened LCF investors secure crowd funding for FSCS legal challenge

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After being denied compensation from the Financial Services Compensation Scheme (other than a tiny handful of exceptions,) London Capital & Finance investors have raised money via crowdfunding to launch a judicial review.

As at 23rd April the campaign had already raised £7,833, exceeding its initial £7,000 target. Technically the campaign is to fund the judicial challenges of only the four LCF investors on the creditors' committee, but if their challenges succeed, this will set a precedent for the rest.

London Capital & Finance investors have been both emboldened and enraged by the FSCS' early indications that it will bail out investors in fellow collapsed minibond scheme Basset & Gold, which went into administration on 1 April.

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FCA knew about misselling of Blackmore Bonds three years before collapse

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The collapse of Blackmore Bonds has once again laid bare the Financial Conduct Authority's institutional contempt for its objective of consumer protection.

Paul Carlier, an independent consultant most well known for blowing the whistle on dodgy FX dealings at Lloyds, contacted the FCA on March 2017 to warn them that Blackmore Bonds' high-risk investments were being missold by an unregulated introducer named Amyma.

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FSCS announces compensation for only 159 London Capital and Finance bondholders

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The hopes of most victims of FCA-authorised Ponzi scheme London Capital & Finance were dashed last week when the FSCS announced it would not compensate them on the basis of having received misleading advice.

It said that investors had merely been given incorrect information, which doesn't generate a liability that is covered by the FSCS' "protected business" rules.

That the FSCS has eventually taken this decision is disappointing for investors but ultimately not surprising. London Capital Finance was not authorised to give advice to retail investors, employed no qualified financial advisers, and its call centre staff were generally trained to avoid crossing the line from information to advice - as in any other non-advisory finance company. (Although some went off-piste and crossed the line into the "I'd tell my own mother to invest in this" school of advice.)

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LCF administrators release first six-monthly update

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Smith & Williamson, the administrators of the £230m FCA-authorised Ponzi scheme London Capital & Finance, have released their first six-monthly update to investors.

The administrators are currently envisaging a return of "as low as 25%" to investors. This is predominantly based on expected recoveries from Independent Oil & Gas. All other LCF assets remain of extremely uncertain value.

This is actually an improvement on S&W's initial forecast of 20% as a "best case" figure. But that is little cause for celebration, given that the LCF asset with the best hope of delivering returns for investors - the "jewel in the crown", in S&W's characteristically optimistic language - is its complex interests in Independent Oil and Gas.

An AIM listed oil exploration company may well have a better prospect of a return than, say, loans to failing resorts on Cape Verde, but that's not saying much.

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LCF investors unable to obtain evidence for their compensation claims, administrator reveals

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A brief interim update sent by the administrators of London Capital and Finance reveals that a number of investors have contacted Smith & Williamson in an attempt to secure recordings of phone conversations between the investors and LCF.

The purpose of requesting these conversations is virtually certain to be to support claims against the Financial Services Compensation Scheme, which has confirmed that it will compensate investors who received recommendations to invest from employees of LCF's marketing agent, Surge Financial, if they amounted to regulated advice.

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