Investment mis-selling is on the rise, and increasing numbers of people are making claims for their losses. In February, some of London Capital & Finance’s clients finally received the compensation they were owed, after a lengthy review process.
It’s another landmark in the ongoing battle against mis-selling practices – here’s more information about what happened.
London Capital & Finance – what happened?
The issue stemmed from London Capital & Finance’s minibonds. Most minibonds are transferrable, but the ones offered by the firm were not; something that experts have since suggested should have set the FCA’s alarm-bells ringing.
One industry insider highlighted “how unusual it is for an investment firm to sell non-transferrable bonds,” before adding, “it is so unusual that the FCA appears to have been slow to identify the risks it presents.”
Prior to going into administration in January 2020, London Capital & Finance had received over £237million from more than 11,500 clients. Once the investors started to lose money on their minibonds, they began to lodge formal complaints, and the company has been embroiled in scandal ever since.
Fighting for compensation
Initially, the FCSC stated that they wouldn’t be compensating all the affected investors, as the issuing of minibonds wasn’t regulated, and thus didn’t fall under their protection.
However, one lawyer involved in the case argued that the minibonds were investments, and should thus be classified as regulated activity. He went on to add that the affected clients “were persons who could little afford to lose the money they invested.”
The end of the review process
After an extensive review, the FSCS concluded that it would be awarding compensation to London Capital & Finance’s investors - £56million in total. It confirmed that 2,878 bondholders had now received money to make up for their losses, and that these clients had held close to 4,000 of the firm’s bonds in total.
The decision to issue such a substantial sum of compensation has had a knock-on effect. The increase in mis-sold investment claims has put pressure on the FSCS, and as such, they’ve had to raise a £92million supplementary levy to cover the costs.
Investors who have yet to receive compensation for losses associated with London Capital & Finance should receive details shortly, regarding the steps they need to take to make a successful claim.
What to do if you’ve been mis-sold an investment
It’s important to be aware of the signs of investment mis-selling; especially as cases are on the rise. Common signs include:
- Lack of clarity about the nature of the investment
- No information about the level of risk involved
- A pressurised ‘hard-sell’
- Failure to present a range of suitable options
- No assessment of your personal attitude to risk, or your financial plans for the future
If you believe you’ve been mis-sold an investment product, you should take action as soon as possible. Goodwin Barrett are here to help you with winning the compensation you deserve – to find out more about our services, get in touch by calling 0808 163 1659 today or email firstname.lastname@example.org.