London Capital & Finance plc

Failed 09 January 2020

FRN: 722603

London Capital & Finance plc (LCF) went into administration on 30 January 2019 and FSCS declared it had failed on 9 January 2020. 

Since LCF entered administration, FSCS carried out an extensive and complex investigation into how LCF operated. Our aim was to determine if any of the activities LCF carried out were regulated, as this is the only way its customers could be eligible for FSCS compensation.

We worked as quickly as possible because we know LCF’s failure has had dire consequences for its customers, but whether or not a ‘regulated activity’ took place took time to find out as it depends on the exact legal and factual circumstances.

There are many different regulated activities, and different exclusions and exceptions can apply to each. Our investigation has involved significant factual analysis, external legal advice and collecting evidence, such as calls and emails, to determine if investors could be eligible to claim compensation.

Read the timeline below for further details on how our investigation has unfolded and the decisions we’ve reached for LCF’s customers.

  • 25 Jun, 2020

    FSCS has started paying compensation to customers who received misleading advice from London Capital & Finance (LCF). So far FSCS has issued 281 decisions and paid £5,155,344 in compensation to LCF customers.

    We appreciate that this has been an extremely difficult and stressful time for LCF customers. For that reason, FSCS has transformed its standard claims process to make the process as easy as possible.

    We have set up a specialist team, focussed on reviewing advice claims on a case by case basis. We've gathered the evidence ourselves, removing the need for customers to provide this or to complete an application form. We've not required LCF customers to obtain additional information from third parties in support of their claim. These changes have enabled us to review claims without customers needing to take any action.

    During June we gained access to an additional 100,000 emails held within LCF’s email server. This evidence provides more information for us to assess.

    While we had expected to reach decisions on the majority of LCF claims by the end of September, assessing this additional information will now extend the timeframe for processing claims. This new evidence is also likely to lead to an increase in the number of LCF customers that will be eligible for compensation.

    We are recalculating the timeframe for processing claims and will provide an update in our next communication before the end of July.

    Having worked hard to simplify the process as much as possible for LCF customers, we are pleased we have now started paying compensation. We appreciate this process has taken time and that LCF customers have been extremely patient. As we move through this process, we want to assure customers that we’re working as quickly as we can to get LCF customers back on track.


  • 05 May, 2020

    Before the end of this month we’ll start issuing decisions to LCF customers who were given misleading advice. We hope to have made all payments to eligible customers by the end of September. We recognise that this has been a difficult time for all LCF customers and we would like to thank you for your patience.

    We’ve completed a careful analysis of the information we’ve gathered and have started reviewing individual claims. To do this we’ve set up a large team focussed specifically on reviewing claims on a case-by-case basis.

    When we’ve reached a decision on an individual claim, we’ll send a letter to the customer to confirm the outcome. If they are eligible for compensation, we’ll include a cheque. By taking this approach we hope to make the process simpler – there’s no need to submit a claim and if you’re due compensation you’ll keep 100% of it.

    If you’re an LCF customer, you do not need to do anything or provide any information at this stage. Please be patient while we work through claims and identify more customers who may have been given advice.

    As mentioned in previous updates, many LCF customers won’t be eligible for compensation based on the evidence we hold. In September we’ll provide details of the next steps if you still think you have a claim.

    For more information on this update, please refer to the Q&A section.

    We’ll provide a further update on our progress before the end of June.

  • 21 Apr, 2020

    London Capital & Finance (LCF) bondholders should be wary of telephone calls, text messages or social media approaches inviting them to discuss compensation about LCF.

    In particular, bondholders should be suspicious of any contact from people claiming to work for Global Finance, Harris Investments or any other company, and claiming to be working in partnership with FSCS. Some scammers are also falsely using the logo or contact details of the Financial Ombudsman Service.

    Do not respond to such messages or engage with them in any way. FSCS is aware of these scams and reports them to the appropriate agencies.

    If you have any concerns about any communications you’ve received about LCF, contact our Enquiries team via our Contact us page.

  • 31 Mar, 2020

    We are still reviewing all the information gathered to help determine what misleading advice was given by London Capital and Finance (LCF).

    As part of this work, we’re in the process of analysing close to a million pieces of information. This includes telephone call recordings, emails and records within LCF’s customer database.

    We’ve gathered this information over the last two months from various sources. Despite the COVID-19 situation, we’re doing everything we can to keep working so we can reach a point where we can assess claims as efficiently and effectively as possible.

    We’ll provide a further update on our progress by 5 May and will aim to confirm when we will start issuing compensation.

    LCF customers don’t need to do anything. Anyone with questions about their claim or the review process can visit the Q&A section by clicking on the tab above.


  • 17 Feb, 2020

    FSCS has paid just under £2.7m to 135 LCF customers in relation to 151 bonds. These bonds were invested following transfers out of stocks and shares ISAs. We made these payments automatically, without these customers needing to make a claim themselves.

    We've been able to compensate this group of customers because arranging a transfer out of a stocks and shares ISA is a regulated activity.

    If you haven’t received compensation from us by 24 February 2020, but believe you transferred out of a stocks and shares ISA, please send us supporting evidence. Find out how to do this on the Q&A tab above.

    We’ve also concluded there will be some customers who were given misleading advice by LCF. These customers have valid claims for compensation, and we are continuing to review the evidence as quickly as possible. We recognise the distress that the delay in confirming eligibility is causing.

    We will update these customers by the end of March 2020.  At this stage, these customers don’t need to make a claim.

  • 11 Feb, 2020

    Scammers are targeting London Capital & Finance customers

    London Capital & Finance (LCF) bondholders should be wary of messages inviting them to discuss compensation about LCF.

    Such messages are being sent through various online and mobile platforms and targeted at consumers who might have a claim regarding LCF. Do not respond to such messages nor engage in any way with the source. FSCS is aware of these scams and reports them to the appropriate agencies. In particular, beware of such messages:

    • via WhatsApp, Messenger, or posted on Facebook
    • linking to unfamiliar websites
    • phone calls from strangers or friend requests from unusual profiles
    • claiming to be from FSCS.

    If you have any concerns about any communications you may have received about LCF, contact our Enquiries team via our contact page.

  • 09 Jan, 2020

    FSCS is now ready to announce its key decisions for claims in relation to the London Capital and Finance (LCF) failure.

    • FSCS will protect the 159 bondholders who switched from stocks and shares ISAs to LCF bonds. Customers in this category do not need to take any action. We will pay compensation to these customers by the end of February 2020.
    • FSCS is unable to protect the 283 bondholders who dealt with LCF before it was authorised to carry out financial services business (on 7 June 2016). We will contact these customers to confirm this.
    • While FSCS maintains that the act of issuing mini bonds is not a regulated activity, and is therefore not something we protect, we have concluded there will be some customers who were given misleading advice by LCF and so have valid claims for compensation. However, we expect that many customers will not be eligible for compensation on this basis. We will provide a further communication with details of when and how customers in this category can submit their claims. We will aim to start reviewing these advice claims in the first quarter of 2020.

    FSCS will aim to provide a further update by the end of February outlining the next steps. In the mean-time LCF customers do not need to take any action.

    LCF entered administration on 30 January 2019, and since then FSCS has investigated many alternative possible bases for claims. Around 11,600 bondholders purchased 16,700 bonds from LCF worth £237m. 

    Following those in-depth investigations, we identified one small group of bondholders (159 in total) who are protected, and a further group (283 in total) whose dealings with LCF occurred prior to the firm’s authorisation and are therefore not protected by FSCS. In addition to those groups, FSCS will need to review advice claims – which are likely to represent most claims – on a case-by-case basis to determine whether misleading advice was given.

    We’re setting up the process for reviewing advice claims. Advice may have been given face-to-face, by letter or email, or by telephone. The need to review communications between LCF and customers and to assess all the relevant evidence means that advice claims are likely to take some time for FSCS to consider.

    While we acknowledge that many customers were given incorrect information about investing in LCF bonds, being given incorrect information on its own doesn’t constitute misleading advice. For that reason, and based on our investigations so far, we believe many LCF customers are unlikely to be eligible for compensation on the basis of misleading advice.  

  • 04 Oct, 2019

    Since our last update, FSCS has made some progress in gathering and examining information and evidence. This includes obtaining further records from Surge Financial Ltd (“Surge”) of customers’ contact with them. We are also continuing to work with Smith & Williamson LLP, the joint administrators of LCF, to obtain further information to assist with our investigations.  

    Surge is an online marketing company which acted on behalf of LCF, facilitating bond applications from prospective bondholders. Following an initial review of its call recordings and emails to investors, we believed that Surge, acting on behalf of LCF, provided some LCF clients with misleading advice, in both telephone calls and emails. 

    The further records which have been shared with us will help FSCS determine whether LCF customers are eligible for compensation.

    We appreciate that LCF customers are keen to know whether they will be eligible for compensation, and our aim is to clarify the position, so we can make an announcement regarding eligibility as soon as possible. However, the LCF case is very complex, and this may take some time.

    A further 2,200 people have completed our fact-finding questionnaire. This takes the total to 7,511, which represents around three-quarters of LCF customers. We'd encourage the remaining LCF customers to complete the questionnaire. This will in no way prejudice any future claim they may have with FSCS.

    Claiming with FSCS directly means you get 100% of the compensation you are owed, up to our limit of £85,000, as we provide a free service to customers.


  • 02 Aug, 2019

    In the month since our fact-finding questionnaire went live just over 5,500 people have completed it. We are analysing the information provided and it is already helping our ongoing investigation into the nature and extent of any protected claims. We would encourage other investors to complete the questionnaire and remind them that this will in no way prejudice any future claim they may have with FSCS.

    Since our last update we have also had a cooperative meeting with representatives from Surge Financial Ltd. They have agreed to provide further information that will help our investigation and we look forward to receiving that soon.

    Customers are reminded that coming to us directly will mean they get 100% of the compensation that they are owed, up to our limit of £85,000, as we are a free service.

    As we still do not have all the information we need to start accepting claims, and this is a complex case, it will be some time until we are ready to make any further announcements on the process itself.

    Summary note on the basis for protected claims against London Capital & Finance plc published 12 July 2019

  • 08 Jul, 2019

    More than 4,390 clients of London Capital & Finance completed our fact-finding questionnaire in the first week it was posted.

    We want to encourage even more LCF clients to complete our questionnaire as it will enable us to build a better picture of the nature and extent of potentially misleading advice that they may have received.

    The information gathered through this process is purely to help us better understand the individual circumstances of investors, and the number of customers who may have been impacted.

    Should there be grounds for compensation and we start accepting claims, information given in the questionnaire by LCF clients will not prejudice their claim.

    Investors who come direct to FSCS will pay no charge, as we are a completely free service.


  • 28 Jun, 2019

    Our investigation into LCF leads us to be believe that there are protected claims, which may result in compensation for some of its investors.

    Following an extensive review of LCF’S business practices, we believe that Surge Financial Ltd, acting on behalf of LCF, provided a number of LCF clients with misleading advice. As this is a regulated activity, it means that FSCS protection would be triggered and that there may therefore be a number of customers with eligible claims for compensation.

    At this stage though we don’t have access to all of the information needed to determine the nature and extent of this misleading advice, and we’re still working with the relevant parties on gaining access to it.

    We’ve therefore launched a pre-application questionnaire, a link to which you’ll find below, for investors to complete in order to help us build a better picture of this advising.

    You may have already completed a questionnaire for the administrators, Smith and Williamson, but we still need the information to help us better understand individual investor’s circumstances and the number of customers that may have been impacted. We’ll provide a further update next month.

    Complete the questionnaire


  • 31 May, 2019

    Over the last few weeks we’ve been reviewing whether there may be grounds for compensation. As we’ve previously mentioned, this work is focused on the relationship between LCF and Surge Financial Ltd and the extent to which either company may have been carrying out regulated advising, arranging or other activities that could give rise to some eligible claims for compensation.

    Following our investigations, we now understand LCF’s business practices much better, and we believe there are sufficient grounds for us to carry on exploring these issues. One increasingly important aspect is the need to consider the different ways investors dealt with the firm when buying their products, as this could impact whether compensation is due or not. This is a complicated case involving significant factual analysis, external legal advice and close work with both the FCA and the administrators, so it will take time.


  • 10 May, 2019

    The promotional materials that we’ve reviewed stated that the LCF mini-bonds were not FSCS protected. However, after a further review of LCF’s business practices, investment materials, and calls recorded with investors, FSCS is investigating whether regulated activities were carried out that might give rise to a claim.

    This work and our legal analysis supports our view that LCF’s core activity of issuing their mini-bonds in the UK was not protected, but there are further issues that need examining. We’re focusing on whether there was any regulated advising, arranging or other activities that may trigger our compensation. We also need to better understand the nature of the relationship between LCF and Surge Financial Ltd.


  • 01 May, 2019

    London Capital & Finance plc (LCF) entered administration on 30 January 2019. The Administrators are representatives from Smith & Williamson LLP. Further information is available on their website at:

    FSCS understands that LCF issued its own mini-bonds to investors and that mini-bonds issued in the UK were not transferable securities. The act of issuing these investments is not a regulated activity, and so this is not something that FSCS can protect. For this reason, although the firm is insolvent, we’re not currently able to declare the firm in default under our rules, or to start accepting claims for compensation.

    We’re continuing to work closely with the administrators and the FCA to try to establish whether LCF might have carried out any other regulated activity for which we could compensate customers. As explained above, this requires an in-depth analysis of this case’s particular circumstances. The firm’s records and information provided by customers and other sources will be used to build a picture of how the firm operated, and while we understand investors’ frustration and desire for clarity, this process will take time.

    As our work progresses we will update this page with further information for LCF’s customers, including if we determine that we can start to accept claims against the firm.



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