To ask the Chancellor of the Exchequer, with reference to the announcement of a compensation scheme for London and Capital Finance bond holders of 19 April 2021, whether his Department has considered paying similar compensation to the Financial Services Compensation Scheme to offset claims they have already settled. (187266)
Tabled on: 26 April 2021
Following an extensive investigation, the Financial Services Compensation Scheme (FSCS) found that certain London Capital and Finance (LCF) bondholders were eligible for FSCS compensation.
The FSCS has now paid out £57.6m to over 2,800 LCF bondholders, and has identified and contacted all bondholders whom it believes are eligible for compensation.
As previously announced, the government will establish a compensation scheme for all LCF bondholders who are not eligible for FSCS compensation. Details of this scheme were set out in a Written Ministerial Statement on 19 April. The government expects the scheme to have paid all bondholders within 6 months of securing the necessary primary legislation, which it will bring forward as soon as parliamentary time allows.
The scheme will not make payments to the FSCS to offset settled claims, as these claims were paid to eligible bondholders in line with FSCS rules. HM Treasury’s separate compensation scheme will compensate those bondholders who are not eligible for FSCS compensation, recognising the unique and exceptional circumstances around LCF’s failure. This compensation will be capped at 80% of bondholders’ initial investments up to a cap of £68,000.
The answer was submitted on 29 Apr 2021 at 07:35.