London Capital & Finance buyers obtained hope of compensation as a part of a brand new authorities plan
Around 11,600 people had invested a total of £ 237 million in the company before it went into administration last year. LCF was approved by the Financial Conduct Authority (FCA) but mainly sold mini-bonds that are not regulated. Hence, after the company's collapse, investors struggle to get their money back.
However, an independent investigation, led by Dame Elizabeth Gloster, has found that the FCA's policies have "significant gaps and weaknesses" which could mean that bondholders are not receiving the expected level of protection.
It is for this reason that the Treasury Department announced today that it will set up its own system to determine whether some bondholders could receive additional one-off equalization payments under certain circumstances – although it is unclear how exactly that system will work. It also sets out the main channels that investors can use to seek compensation.
Both the FCA and the government have accepted recommendations from the report, including advice on whether to regulate products like mini-bonds. See our Are Your Savings Safe? Guide to Protecting Your Money.