Four of the 11,500 people that lost more than £237million when LCF fell into administration began a landmark legal case yesterday [Tuesday January 19] after they were denied compensation by the Financial Services Compensation Scheme (FSCS).
Thirteen people connected to LCF are currently being sued by administrators attempting to claw money back for investors.
Among them is Tunbridge Wells businessman and former local Conservative party chairman Simon Hume-Kendall who set up LCF and went on to become its largest borrower,
The collapse of LCF is also currently the subject of a Serious Fraud Office investigation.
But the FSCS, which is funded by the financial services industry, has only paid around 3,000 bondholders compensation saying the others are not eligible as LCF was not conducting ‘regulated activities’.
Barrister James McClelland, who is representing the investors pro bono, told the Administrative Court how some elderly customers had been forced out of retirement. Others had to sell their home and one was on the verge of being made homeless.
He said: “For some this has been life-changing, and for others it has been little short of catastrophic.”
McClelland said the FSCS was wrong to say that LCF was not carrying out a regulated activity, as he tried to clarify several complex points of regulation. He said: “These are precisely the sorts of investors who one might expect to be protected.”
LCF collapsed in January 2019 after selling minibonds that offered the prospect of returns as high as eight per cent, but administrators have subsequently said the money ended up in the control of just a handful of key figures connected to LCF.
Investors’ money is said to have been spent on horses, a helicopter and a lifetime membership to Annabel’s, the exclusive Mayfair club.
