Investors in London Capital Finance lose out in Court fight


Investors in London Capital Finance lose out in High Court fight for compensation

London Capital & Finance investors have lost a high court case over compensation.

Thousands of investors who lost money in the collapse of the investment firm are not entitled to compensation, the High Court has ruled.

LCF went into administration in January 2019, leaving 11,600 investors facing losses of £237million.

Court ruling: Thousands of investors who lost money in the collapse of London Capital & Finance have been told they are not entitled to compensation, the High Court has ruled

Court ruling: Thousands of investors who lost money in the collapse of London Capital & Finance have been told they are not entitled to compensation, the High Court has ruled

The Financial Services Compensation Scheme (FSCS) has, up to February this year, paid out around £56.3million in compensation to nearly 2,900 LCF bondholders.

But this only covers a minority of LCF victims – those who were found to have been given financial advice by LCF or who transferred money from their ISA to pay for LCF mini-bonds.

These were so-called regulated activities, and therefore were covered by the FSCS.

But controversially, the compensation fund argued that the actual buying of mini-bonds was not a regulated activity, and so most investors would not get a pay-out.

Four investors who bought bonds from LCF took action against the FSCS, arguing that the bonds were transferable and they should be entitled to compensation. 

However, in a ruling yesterday, Mr Justice Bourne dismissed the claim.



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