London Capital & Finance plc, often known as LCF, entered administration in January 2019 after selling high-interest mini-bonds to thousands of investors. For many bondholders, the years that followed have involved understanding several possible routes to compensation, including Financial Services Compensation Scheme payments, the government’s lcf compensation scheme, and distributions from the administration.
Although the process can appear complicated, compensation arrangements have delivered meaningful support to many affected investors. Understanding which route may apply, keeping clear records, and responding promptly to official communications can help bondholders protect their position and pursue the recovery available to them.
What happened to London Capital & Finance?
London Capital & Finance marketed fixed-rate mini-bonds that were promoted as offering comparatively high rates of return. The investments were used to fund loans to businesses and were not the same as ordinary savings accounts or cash deposits with a bank.
In January 2019, the Financial Conduct Authority intervened and LCF entered administration. The collapse affected more than 11,000 bondholders who had invested substantial sums through the company.
LCF’s failure prompted major regulatory and government attention. An independent review led by Dame Elizabeth Gloster examined the Financial Conduct Authority’s handling of LCF. The review’s findings contributed to the creation of a dedicated government compensation scheme for many LCF bondholders.
Key compensation routes for LCF bondholders
There have been several potential sources of recovery for people who invested in London Capital & Finance. The most relevant option depends on the individual’s circumstances, investment history, payments already received, and eligibility under the rules of each scheme.
1. Financial Services Compensation Scheme payments
The Financial Services Compensation Scheme, commonly called the FSCS, protects eligible customers when authorised financial firms fail. LCF was authorised by the Financial Conduct Authority for certain regulated activities, even though the mini-bonds themselves were generally not regulated investments.
That distinction matters. Eligibility for FSCS compensation was assessed according to the circumstances of each claim and the regulated activities carried out by LCF. The FSCS declared LCF in default in 2019 and paid compensation to eligible claimants, subject to the applicable compensation limit.
For claims relating to firm failures from 1 April 2019 onward, the standard FSCS investment compensation limit has generally been up to £85,000 per eligible person, per authorised firm. The precise amount due in an individual case can depend on the claim, the applicable rules, and any relevant deductions or recoveries.
2. The government’s LCF compensation scheme
In December 2021, the UK government announced a compensation scheme specifically for former LCF bondholders. The scheme was designed to provide additional redress after the exceptional circumstances surrounding the failure and the findings of the Gloster review.
The scheme was administered by the FSCS and was intended to compensate eligible bondholders for 80% of their original investment, capped at £68,000. The amount available could be affected by compensation, recoveries, or distributions already received from other sources.
This dedicated arrangement gave many eligible bondholders a clearer path to a substantial payment, particularly where their losses exceeded the level covered through other routes. It also recognised that LCF investors had faced an unusually difficult and high-profile set of circumstances.
3. Payments from the LCF administration
Administrators appointed to LCF have worked to identify, realise, and distribute available assets. Bondholders may receive distributions from the administration as funds are recovered and the legal process permits payments to be made.
Administration distributions are separate from the rules of the FSCS and the government compensation scheme. However, amounts received from an administration may be relevant when another compensation body calculates a final award. Keeping a record of every payment received is therefore important.
At a glance: LCF recovery options
| Route | Purpose | Who may benefit | Important point |
|---|---|---|---|
| FSCS compensation | Protection for eligible claims against failed authorised firms | Eligible investors whose claim met the FSCS rules | Eligibility is assessed individually and depends on the relevant regulated activity. |
| Government LCF compensation scheme | Dedicated redress for eligible LCF bondholders | Bondholders meeting the scheme’s criteria | The published scheme provided 80% of original investment, subject to a £68,000 cap and relevant adjustments. |
| Administration distributions | Return of funds recovered from LCF assets | Creditors and bondholders under the administration process | Payment timing and amounts depend on asset recoveries and the administration process. |
Who may be eligible to make an LCF compensation claim?
Eligibility depends on the compensation route. A person’s entitlement cannot be confirmed simply because they held an LCF mini-bond. However, many former bondholders have successfully received compensation or distributions through one or more available channels.
When assessing your situation, it is useful to consider the following questions:
- Did you invest directly in London Capital & Finance mini-bonds?
- Was the investment held in your sole name, jointly with another person, through a trust, or through a business?
- Have you previously received an FSCS payment?
- Did you receive a payment under the government’s LCF compensation scheme?
- Have you received an interim or final distribution from the LCF administration?
- Do you have documents confirming the amount invested and any interest payments received?
- Have you received letters, emails, or claim references from the FSCS, scheme administrators, or LCF’s administrators?
Answering these questions early can make it easier to identify the records you need and to explain your position if further information is requested.
How to prepare for a London Capital & Finance compensation claim
A well-organised file can save time and reduce avoidable delays. Even where a scheme has contacted investors directly, it remains sensible to retain copies of all evidence and correspondence.
Gather your core investment documents
Start by collecting evidence that shows the amount you invested, the date of investment, and the account into which funds were paid. Useful documents may include:
- Bond application forms and investment certificates.
- LCF account statements and confirmation letters.
- Bank statements showing payments to LCF.
- Records of interest payments received from LCF.
- Emails, letters, and telephone notes connected to the investment.
- Proof of identity and current contact details.
- Any correspondence relating to FSCS compensation, government scheme payments, or administration distributions.
Record all compensation and recovery payments
Create a simple list of amounts received, the payment date, and the source of each payment. This can include interest payments made before LCF entered administration, FSCS awards, government scheme payments, and administrator distributions.
Accurate records are valuable because compensation calculations may take account of sums already recovered. A clear payment history helps ensure that any question about prior recoveries can be answered quickly and consistently.
Use official contact details and communications
LCF investors should be alert to scams. Fraudsters may use the names of compensation schemes, administrators, regulators, or claims businesses to seek money or personal data. A legitimate compensation process should not require an unexpected upfront payment in exchange for releasing compensation.
Use official correspondence you have received, verify contact details independently, and be cautious with unsolicited calls, emails, or text messages. Never share security codes, online banking credentials, or identity documents unless you are satisfied that the request is genuine and necessary.
Understanding the £85,000 FSCS limit and the £68,000 LCF scheme cap
Two figures are frequently mentioned in relation to London Capital & Finance: £85,000 and £68,000. They relate to different arrangements and should not be treated as interchangeable.
- £85,000: the standard investment compensation limit that has applied to eligible FSCS claims concerning firm failures from 1 April 2019 onward.
- £68,000: the maximum payment under the government’s LCF compensation scheme, based on 80% of an investor’s original investment.
For example, an investor with an original investment of £30,000 could potentially fall within an 80% calculation of £24,000 under the government scheme, before considering the scheme rules and any relevant adjustments. An investor with a larger original investment could reach the £68,000 cap.
These examples are for illustration only. The final amount payable depends on the formal terms of the relevant scheme, individual eligibility, and payments already made or due from other sources.
Why it is worth reviewing your LCF position now
Even if you have received a previous payment, it can be worthwhile to review your records. Compensation schemes, administrator distributions, claim deadlines, and contact arrangements can change over time. A review can help you confirm whether you have responded to all official requests and whether your contact details remain correct.
Taking a structured approach offers several benefits:
- It helps you identify any missing documents before they are urgently needed.
- It provides a reliable record of your original investment and amounts recovered.
- It makes it easier to respond to official eligibility or identity checks.
- It reduces the risk of overlooking important communications.
- It can help you spot suspicious contact from potential fraudsters.
Steps to take if you believe compensation is still outstanding
- Review prior correspondence. Check emails, letters, claim references, and bank statements for evidence of applications, awards, and payments.
- Calculate your original investment. Record each bond purchase separately if you made more than one investment.
- List all sums received. Include interest, compensation, and administration payments, together with dates and sources.
- Check your contact details. Ensure that the relevant official body has your current postal address, email address, and bank details where appropriate.
- Verify the current process. Confirm whether an application route, review process, or outstanding administration distribution applies to your circumstances.
- Seek suitable professional support if needed. If your records are complex, a regulated financial adviser, solicitor, or reputable free debt and money guidance service may help you understand your options.
Do you need a claims management company?
Some investors consider using a claims management company to help with paperwork or communications. Before agreeing to use one, it is important to understand the fees, cancellation terms, and the exact service being offered.
In many situations, former LCF bondholders have been able to deal directly with the relevant compensation body or administrator. Direct engagement can help preserve the full value of any payment by avoiding unnecessary charges. If you choose to seek paid assistance, request written details of all costs and make sure the firm is authorised or appropriately regulated for the service it provides.
Frequently asked questions about LCF compensation claims
Were London Capital & Finance mini-bonds protected like bank savings?
No. LCF mini-bonds were not the same as money held in a standard bank or building society savings account. However, LCF’s authorisation for certain regulated activities meant that some claims could qualify for FSCS compensation, depending on the individual circumstances. The separate government scheme also created an important route to redress for eligible LCF bondholders.
Can I receive more than one type of payment?
It is possible for an investor’s circumstances to involve more than one recovery route, such as compensation and an administration distribution. However, schemes may take previous payments into account when calculating what remains payable. This is why complete records are essential.
What if the original investor has died?
Executors or personal representatives may need to deal with compensation, estate, or administration matters on behalf of a deceased investor. They will usually need evidence of their authority, such as a grant of probate or letters of administration, together with documents showing the deceased person’s LCF investment.
What if my address or bank account has changed?
Update your details through verified official channels as soon as possible. Keep written confirmation of any change request and do not provide sensitive information in response to an unsolicited message.
Can I rely on this guide as legal or financial advice?
No. This guide provides general information about London Capital & Finance compensation claims. Eligibility, calculations, deadlines, and processes can depend on individual circumstances and may change. Where necessary, obtain advice tailored to your situation from a qualified professional.
Moving forward after an LCF investment loss
The London Capital & Finance collapse was a difficult experience for many households, including people who believed they were selecting a secure, income-producing investment. The compensation measures introduced after the failure have provided important financial support to many eligible bondholders and demonstrate the value of checking every available recovery route.
The most productive next step is to stay organised, keep your evidence secure, review official correspondence, and ensure that you understand which payments you have received. With a clear record of your investment and recoveries, you will be better placed to respond to any remaining claim, review, or distribution opportunity connected with London Capital & Finance.
