Arrangements for a scheme to compensate investors in a failed financial services firm have cleared the Commons
London Capital & Finance (LC&F) went into administration in January 2019, leaving 11,600 investors facing losses of £237 million.
Measures in the Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill include arrangements for a compensation scheme for customers who were not eligible for redress from the Financial Services Compensation Scheme (FSCS).
As the House will know only three Government compensation schemes have been established in the last three decades
Work and pensions minister Guy Opperman
Work and pensions minister Guy Opperman told the Commons: “It is important to avoid creating the misconception that Government will stand behind all bad investments in the future where FSCS does not apply.
“The Government will establish a scheme based on the level of FSCS compensation capped at £85,000 under the FSCS.
“We have looked at the issues carefully and are satisfied that the individual circumstances surrounding LC&F are completely unique.”
He added: “There are other mini bond firms that have failed, but LC&F is the only mini bond firm which was authorised by the FCA and sold bonds in order to on-lend to other companies.
“As the House will know only three Government compensation schemes have been established in the last three decades.”
A House of Commons Library briefing note…