The FSCS is to close its compensation scheme for victims of the failed £237m mini-bond provider London Capital & Finance (LCF).
The compensation body says that it will close the scheme, administered on behalf of the government, on 22 October.
The FSCS says it has so far paid 99.5% of customers eligible for compensation.
In total £115m has been paid out through the government-backed scheme with an estimated £173m in compensation paid to LCF victims in total.
The figures suggest victims have received, on average, just over 70% of the investments they lost.
The amount paid out to victims was lower than the amount lost for a variety of reasons, mainly due to caps on compensation per claim.
In addition to the £115m paid through the government scheme, the FSCS paid out around £58m to bondholders directly prior to the government scheme. This included those eligible under the FSCS’s standard compensation rules.
However, the FSCS’s rules capped the amount compensated to £85,000 per claim. The government scheme also had a cap of 80% of the bondholders’ investment, up to a £68,000 limit. Losses above the caps were not compensated.
The Financial Services Compensation Scheme said there were a “small number” of claims that have still not been paid. These may involve cases where the bondholder has died and next of kin cannot be contacted.
The FSCS said it may be able to pay these missing victim claims in exceptional circumstances after 31 October but these would take longer to settle.
Any cheques sent out can still be cashed as long as it is within six months of the issue date.
More than 12,300 investors in LCF ‘mini-bonds’ faced collective losses of £237m when the firm failed in 2019, causing a national outcry.
Many of the victims were on modest incomes but were lured in by promises of high returns for minimum risk by investing in ‘mini-bonds’ invested mainly in property firms. The FSCS initially rejected many claims as outside its remit as LCF was only partly regulated.
Many of the bonds were kept, however, in ISAs and SIPPs which are regulated. Compensation was guaranteed after, in an unusual move, the government stepped in to fund a compensation scheme.
In recent months it has emerged that some scammers have been targeting compensated bondholders with bogus investment offers.
The FSCS can be contacted on 0800 091 0030.
• Editor’s Note: story updated to add more detail of compensation amounts.
