London Capital Finance - Can you make FSCS Claims?
It was clear on the LCF website that they were not protected by the FSCS so can claim for your lost investment? LCF were regulated by the Financial Conduct Authority (FCA) for the loans that they made but the mini bonds that they issued were unregulated and not covered by FSCS.
Their adverts did have the words "capital at risk" but it was not made clear what this meant and adverts from Surge Financial using websites like Top ISA Rates did not mention this.
1) If they were given "Negligent advice".
Many people seem to consider that they were advised by LCF staff to invest in the LCF bonds or ISA products. However the definition of advice is very specific.
I believe that the reason S&W have mentioned advice is that some LCF investors met members of Surge or LCF staff in person to discuss investments and this may have been sufficient constitute advice on their specific circumstances.
However the vast majority of people who bought online or over the phone would not qualify.
2) Negligent transfer of a Stocks & Shares ISA
Many people seem to have transferred cash ISAs to LCF which is doubly unfortunate as it now means they have lost the tax benefit of any sums that were transferred to LCF.
If anyone moved a S&S ISA to LCF then they may be covered as this could be considered as dealing in investments as an agent for FCA purposes
This would only apply to a S&S ISA, cash ISA transfers would not be considered an eligible investment.
In order to open the doors to getting money back above the 20% that administrators anticipate could be recovered they will have to find some other avenue to access compensation which is likely to involve specialist legal teams.
Some people seem to believe that they can find any no-win, no-fee solicitor to do this work. I suspect that they will be severely disappointed if they approach them as this is a very specialised area that requires specific skills and knowledge of financial regulation. It's not the job an average solicitor can do.
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| London Capital Finance FSCS Claims |
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| London Capital Finance - How to access FSCS Claims |
The report from Smith & Williamson indicates two possible ways that investors in LCF may be able to get compensation from FSCS.
1) If they were given "Negligent advice".
Many people seem to consider that they were advised by LCF staff to invest in the LCF bonds or ISA products. However the definition of advice is very specific.
I believe that the reason S&W have mentioned advice is that some LCF investors met members of Surge or LCF staff in person to discuss investments and this may have been sufficient constitute advice on their specific circumstances.
However the vast majority of people who bought online or over the phone would not qualify.
2) Negligent transfer of a Stocks & Shares ISA
Many people seem to have transferred cash ISAs to LCF which is doubly unfortunate as it now means they have lost the tax benefit of any sums that were transferred to LCF.
If anyone moved a S&S ISA to LCF then they may be covered as this could be considered as dealing in investments as an agent for FCA purposes
This would only apply to a S&S ISA, cash ISA transfers would not be considered an eligible investment.
Summary
The upshot of the information from the administrators is that very few investors in LCF bonds or ISAs would be considered eligible for compensation by applying to the FSCS themselves.In order to open the doors to getting money back above the 20% that administrators anticipate could be recovered they will have to find some other avenue to access compensation which is likely to involve specialist legal teams.
Some people seem to believe that they can find any no-win, no-fee solicitor to do this work. I suspect that they will be severely disappointed if they approach them as this is a very specialised area that requires specific skills and knowledge of financial regulation. It's not the job an average solicitor can do.
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