Around 11,600 people had invested a combined £237 million with the firm before it went into administration last year. LCF was authorised by the Financial Conduct Authority (FCA), but it mainly sold mini-bonds, which aren’t regulated, so investors have struggled to get their money back after the firm’s collapse.
But an independent investigation led by Dame Elizabeth Gloster has now concluded there were “significant gaps and weaknesses” in the policies of the FCA, which could mean bondholders didn’t get the level of protection they were entitled to expect.
As such, the Treasury has today said it will set up its own scheme to determine whether some bondholders could be given extra one-off compensation payments in certain circumstances – although it’s unclear how exactly this scheme will work. It’s also set out the main channels investors can use to try and get compensation.
Both the FCA and the Government have also accepted recommendations from the report, including consulting on whether to regulate products such as mini-bonds. See our Are your savings safe? guide for help protecting your cash.