What the record says
Three dates do most of the work in this case. LCF became fully authorised by the FCA on 7 June 2016. It entered administration on 30 January 2019. FSCS declared it had failed on 9 January 2020. Because FSCS can only pay where a regulated activity took place, the authorisation date matters: FSCS states that a bondholder who invested before 7 June 2016 is not covered by its rules.
What FSCS paid, and why only some bondholders
FSCS initially identified 159 bondholders whose bonds had been funded by a transfer out of a stocks and shares ISA, because arranging a transfer out of a regulated investment is a regulated activity. It then reviewed advice claims, and by 19 April 2021 had paid over £58m to more than 2,800 bondholders who were eligible under its rules. FSCS has described the investigation as one of the most complex it has had to deal with.
The government’s one-off scheme
On 19 April 2021 the government announced a one-off compensation scheme for bondholders FSCS could not compensate. FSCS administered it. It paid 80% of the amount that would have been available under FSCS rules, up to a maximum of £68,000. By the time the scheme closed on 31 October 2022, £115m had been paid to eligible bondholders, and FSCS reported it had paid 99.5% of eligible customers. As of February 2024, FSCS had paid out more than £173m in total — £58m under its own rules and £115m under the government scheme.
What a bondholder can still do
If you have not already been paid, the practical questions are whether you made a claim that was never concluded, whether your circumstances were exceptional, and whether you received misleading advice from a firm other than LCF. FSCS said in October 2022 that it might still be able to pay a small number of claims in exceptional circumstances after the scheme closed, and that those would take longer to process. The scheme’s own documentation is the place to start, and the government publication linked below sets out the scheme’s terms.
Watch out for the follow-on letters
In August 2023 FSCS warned that letters on FSCS headed paper were in circulation encouraging LCF customers to get in touch about compensation following the liquidation of LCF assets, and that these letters were not from FSCS and were a scam. That warning is a useful general lesson: in the aftermath of any failure, unsolicited offers of help are a recurring risk. Check anything you receive against the FSCS contact details on its own site.
What we do not say
We make no finding about any person or firm involved in LCF, we express no view on the merits of any individual claim, and we do not estimate what anyone might recover. Where we state a date, a payment or a limit, it comes from the FSCS failed-firm page, the government’s scheme publication or FSCS’s own press material, each of which is listed below.