The FSCS said this week that it had increased the rate at which it is issuing decisions to LCF customers as new evidence has come to light.
The speeding up of claims handling will be welcomed by victims but the FSCS has also warned it will miss its September deadline to deal with the bulk of claims because of the large amount of new evidence that has now been received including over 100,000 new emails.
As of this week the FSCS has so far made 844 decisions and paid out over £13.5m in compensation and expects the volume of decisions to “increase further” in the coming months.
The increase in claims settling comes after the FSCS in June said it had then paid out £3.3m to 169 LCF customers who invested in LCF mini-bonds following transfers from stocks and shares ISAs. As this was a regulated activity the FSCS paid these claims immediately.
There has been criticism of the FSCS and FCA for a slow response to the LCF mini-bond firm collapse which saw more than 11,000 investors lose £235m.
The Financial Services Compensation Scheme recently blamed potential claims from the London Capital & Finance mini-bond scandal for an additional Ј44m cost in its Ј649m 2020/21 budget proposals.
This is despite the fact that many LCF investors’ claims are likely to be rejected as outside the FSCS remit, according to the FSCS. Even so the body says it has had to set aside Ј44m to deal with potential claims. A number of legal cases are already under way.
Questions have been raised over whether all or just some of LCF’s products were regulated.
The FSCS says the specialist team it set up to review claims is continuing to analyse the evidence collected, including telephone call recordings, emails, records within LCF’s customer database, and an additional 100,000 emails it gained access to last month.
The LCF says while it sifts through this evidence LCF customers do not need to take further action or send other evidence unless requested.
The FSCS said that assessing the additional information means it will not complete its review process by September as it had expected but it says it will provide “a more definite timescale” as soon as it can.
In a statement the FSC said: “This is a priority for us and we’re working to pay compensation to LCF customers as quickly as possible. We understand this has been a distressing experience for LCF customers and appreciate the patience they have shown.”