London Capital & Finance (LCF) Compensation Scheme
This page provides information about the government’s scheme for compensating London Capital & Finance (LCF) bondholders.
Documents
Details
The government had established a compensation scheme (the “Scheme”) for investors in the failed minibond issuer, London Capital & Finance plc (LCF). The Scheme launched on 3 November 2021 and the Financial Services Compensation Scheme (FSCS) administered the Scheme on behalf of the government.
The Scheme closed on 31 October 2022.
Almost all eligible bondholders have now received compensation and a total of £115m has been paid out by the scheme.
The FSCS may still be able to pay outstanding claims in exceptional circumstances, however, as scheme has formally closed, it may take longer to process these claims.
More information, including latest updates and a Q&A can be found on the FSCS website: London Capital & Finance (LCF) failure - latest update FSCS
Eligibility
The Scheme was available for bondholders with an outstanding investment with LCF which had not already been compensated by the Financial Services Compensation Scheme (FSCS).
FSCS have contacted eligible bondholders directly with details of their compensation payment and bondholders did not need to do anything to claim compensation from the Scheme.
Individuals were eligible to receive compensation if:
- They owned LCF bonds and have not received any compensation from FSCS; or
- They had received some compensation from FSCS for LCF bonds, but still had an outstanding LCF bond for which they had not received any compensation. Individuals in this position were also potentially eligible for the Scheme, provided they have received less than £85,000 from FSCS.
Individual might also have been eligible to receive compensation if they were:
- Representing the estate of someone who would have been eligible under the Scheme.
Overview
The Scheme paid 80% of bondholders’ principal investment in eligible bonds, up to a maximum of £68,000. Where bondholders had received interest on their bonds, distributions from the insolvency administrators, Smith & Williamson, or compensation from the FSCS for LCF bonds, this reduced the amount of compensation payable under the Scheme. More detail on exactly how compensation was payable is provided in the “worked examples” section below.
Payments under the Scheme are governed by the Scheme Rules. By accepting an offer of compensation under the Scheme, bondholders agreed to the conditions outlined in 4.4.2 of the Scheme Rules, a summary of which was provided to bondholders alongside their offer of compensation.
Where bondholders accepted the offer of compensation under the Scheme, FSCS automatically took over all remaining rights they might have against LCF. This means that bondholders were not able to make their own claim in the insolvency of LCF, except in certain circumstances. In the event that FSCS recovered more for any particular bondholder than they had received in compensation under the Scheme, FSCS paid any excess to the bondholder, minus any reasonable costs of recovery and distribution.
Bondholders had 6 months to accept their offer of compensation. Bondholders who had not accepted their offer of compensation during this time forfeited their right to compensation under the Scheme unless there were exceptional circumstances. More information on these exceptional circumstances can be found in the Scheme Rules.
Updates to this page
Published 3 November 2021Last updated 2 November 2022 + show all updates
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The webpage has been updated to reflect that the scheme has now closed.
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Scheme rules updated
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First published.