The Financial Services Compensation Scheme has paid out just over £38.1m in compensation to LCF customers, a substantial increase from the £20m paid out by August when the body increased the team allocated to the case by nearly 80%.
In its latest update, the body revealed that it has worked with Capita to create an artificial intelligence (AI) approach to help review 700,000 telephone recordings. The accuracy of the AI was then checked manually by the team before making any claims decisions.
Without the use of AI, the body said it would not have been able to start paying claims until January 2021. It decided “this timescale was not acceptable given LCF customers had already been waiting many months for us to be able to confirm the outcome of their claim.”
There has been criticism of the FSCS and FCA for a slow response to the LCF mini-bond firm collapse which saw more than 11,000 investors lose £235m.
However, the FSCS said it has been proud of the service they have provided.
In its update it said: “This process has been extremely lengthy and complex. We appreciate that LCF customers have had to wait patiently until evidence has been reviewed and a decision has been made, but we want to ensure that each piece of evidence and each claim gets the attention it requires. Those who are still waiting for a decision do not need to take any action or send us any other evidence at this stage, unless we ask them to do so.
“We are proud of the service we provide but we are always looking for ways to improve the customer journey. The ongoing analysis of the LCF claims has presented significant challenges, which we have overcome. LCF customers continue to remain at the heart of this work, and we’re doing our best to ensure that they all receive a decision on their claim as soon as possible.”
The FSCS this summer blamed potential claims from the London Capital & Finance mini-bond scandal for an additional £44m cost in its £649m 2020/21 budget proposals.
This is despite the fact that many LCF investors’ claims are likely to be rejected as outside the FSCS remit. A number of legal cases are already under way.