LC&F Government funded compensation scheme set up

ErinGoBrath

I would argue that the 20% haircut these people are taking after being scammed is a lot less than the haircut forced upon those poor saps in the Woodford Equity Income Fund when it was gated and subsequently rebranded.

The latter are more deserving in my opinion.

Albermarle

dunstonh said:

https://www.ftadviser.com/regulation/2021/04/19/govt-launches-120m-lcf-compensation-scheme/

I know LC&F bond holders will be happy with this but I personally feel it is wrong.   The taxpayer is effectively picking up the tab for bad investment decisions made by people that focused on greed before common sense.   Ok, that is a cold way to describe it but you could see LC&F warnings all over the internet and the interest rate was too high to be close to reality for a savings account.   Even the ones on this site, when the board wasnt too busy deleting them and banning people, were right at the top on a google search.

And we know from countless threads that people were willing to ignore the warnings and still go with it anyway.   So, instead of helping the homeless or children going without meals or the many other deserving causes that need support, the Government has decided to pay £120 million in compensation to greedy investors making poor investment decisions.     

.... and just in case.   Cheerio all.

It's a tough line Dunstonh !
Problem is when you get down to an individual level of naive people, totally gutted after  losing their life savings ( partly through greed I admit ) to criminal activity that everybody knows was left free to operate for far too long . Then it is very easy to make a case for compensation .

Plus of course the current government is very keen to be seen as looking after the 'man in the street'  and not to get branded the Nasty Party again .

Maybe 50% compensation would have been better though.

jimjames

What is currently unclear from the info that has been released is what happens to the money recovered by administrators estimated to be 20-25% that originally was going to be all that the bondholders got back. Will that money recovered now go to the government instead or will it go to bondholders so they might be compensated at 100% eventually? It doesn't say one way or other but I suspect it will be kept for government to cover some of their outlay.

dunstonh

jimjames said:

What is currently unclear from the info that has been released is what happens to the money recovered by administrators estimated to be 20-25% that originally was going to be all that the bondholders got back. Will that money recovered now go to the government instead or will it go to bondholders so they might be compensated at 100% eventually? It doesn't say one way or other but I suspect it will be kept for government to cover some of their outlay.

I suspect a good proportion will go to the FSCS as part of their remit is to recover assets wherever possible.  However, with the Government now dipping in, who knows what will happen.

Reaper

jimjames said:

what happens to the money recovered by administrators...?

I imagine it is deducted from the bill the FSCS has to pay. After all they are only meant to cover any shortfall.

Reaper

dunstonh said:

... I personally feel it is wrong. The taxpayer is effectively picking up the tab for bad investment decisions made by people that focused on greed before common sense.

I agree it is wrong, but I don't agree it was the fault of greedy investors who were willing to take a risk. They were naive investors who thought "guaranteed" and "FCA regulated" meant their money was safe. The fault lies with the FCA and the government for allowing unregulated companies to operate and target unsophisticated investors.

I could set up one tomorrow. I'd set up a new company for £12 and register it to a virtual office and use a made up person's name at Companies House because they don't perform any checks. Then I'd pay introducers 25% of any money they introduce to my scam knowing they will lie and break the law but that's fine because I wouldn't be. Then I would and sit back while the money rolls in. I'd invest some of it so it looked like it was just a failed venture, steal the rest, close the company and then set up a new one and repeat. The UK is rapidly becoming the scam capital of the western world and will continue to do so until the regulators wake up and decide to start doing their job.

jimjames

Sadly Reaper I think you are right. I'm still seeing adverts for unregulated investments that I thought the FCA were meant to have stopped.

The roll call of mini bonds that were questioned here and then failed keeps growing.

Albermarle

This morning was looking at a local news site online and this popped up. 

Best Fixed Rate Bonds - Returns Up To 7% Per Year

Flexible Bonds Showing Great Returns. Completely free of charge, only takes 20 seconds and always no obligation

bonds-4u.com

Alexland

Maybe my taxes could go towards paying for that too..

ratechaser

Albermarle said:

This morning was looking at a local news site online and this popped up. 

Best Fixed Rate Bonds - Returns Up To 7% Per Year

Flexible Bonds Showing Great Returns. Completely free of charge, only takes 20 seconds and always no obligation

bonds-4u.com

FCA registered, look, there's a number at the bottom of the page... and a nice office in the city. Sure it must all be fine.