LCF slumped into administration at the end of January hitting 14,000 bondholders with holdings totalling £236m.
The firm was ordered to cease all marketing activity in relation to its ISA and bond by the FCA in December.
LCF was the issuer of mini-bonds which were used for the purposes of making loans to corporate borrowers to provide those borrowers with capital for further investment.
The firm did not need to be authorised by the FCA to issue the mini-bonds but did need to be authorised to issue the promotion of them.
A statement from the FSCS read: “FSCS understands that the firm issued its own mini-bonds to investors on a non-advised basis.
“This activity is not a regulated activity under the Regulated Activities Order and, therefore, is not FSCS-protected.
“For this reason, while the firm is insolvent, we’re not accepting claims against the firm.”
LCF is currently in administration, with administrators being representatives from Smith & Williamson LLP.
The statement added: “Should we determine that there are circumstances that give rise to potentially valid claims, we’ll begin to accept claims against London Capital & Finance plc.
“If this happens, we’ll communicate this to customers on our website.
“We’re working closely with the Administrators to understand more about how the firm carried out its regulated activities.”