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Bondholders finally offered compensation after LCF scandal

Under the proposed terms, the Government will pay 80 per cent of the compensation, up to a maximum of £68,000.

Those who still want to fight on in the hope of receiving their principal investments in full can reject the offers when the FSCS contacts them. Approved claimants should get their payments before the end of the year.

LCF went into administration on 30 January 2019, and the FSCS declared it had failed on 9 January 2020. The FSCS conducted an “extensive and complex” investigation into how LCF operated, which concluded on 19 April 2021.

The investigation aimed to determine if any of the activities carried out by LCF were regulated, as only regulated activities would be eligible for FSCS compensation.

The FSCS has already paid out around £57.6 million to 2,871 bondholders who were eligible for compensation under its existing rules. The Government has since announced the details of its one-off compensation scheme, which will provide compensation to eligible bondholders which the FSCS would not otherwise have compensated.

Roger Isaacs, Forensic Partner at Milsted Langdon, has spoken at length about the LCF investigation – even appearing on BBC Radio 4’s Money Box programme.

He said it was very welcome news that the thousands of people who had lost money would finally receive compensation despite the fact that, technically, they may have invested in so-called unregulated mini-bonds

“It is good to see compensation being paid out,” said Roger “but the victims of this massive financial collapse are still waiting to see if any of the individuals behind LCF are to face criminal prosecution or financial claims in the civil courts.”

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