The compensation fund for victims of bad investment advice today said for the first time that customers of collapsed London Capital & Finance may be eligible to claim.
LCF outsourced marketing to Surge, a tech-savvy business run by former policeman Paul Careless, paying it a huge 20% commission.
Initially wary of promising compensation, the Financial Services Compensation Scheme today said: “Following an extensive review of LCF’s business practices, we believe Surge... provided a number of LCF clients with misleading advice. As this is a regulated activity, it means FSCS protection would be triggered and that there may therefore be a number of customers with eligible claims for compensation.”
Careless was arrested last week but not charged as part of the Serious Fraud Office investigation into LCF. The 11,700 victims of LCF invested £237 million.
Thomas Donegan, helping victims at law firm Shearman & Sterling, said: “This is good news. The FSCS is casting a wide net to capture what might be ‘advice’.”
Independent financial advisers, which fund the FSCS compensation pot, complained at footing the bill despite having no culpability.
IFA Neil Liversidge, who warned regulators about LCF in 2015, said: “This smells like a stitch-up. The Establishment is buying off complaints with other people’s money. My money!”
