London Capital & Finance Compensation Scheme: Contingencies Fund Advance Debate
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John Glen
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London Capital & Finance Compensation Scheme: Contingencies Fund Advance
John Glen Excerpts(3 years ago)
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The Economic Secretary to the Treasury (John Glen)
On 19 April 2021 the Government announced the detail of a compensation scheme for London Capital & Finance plc (LCF) bondholders (HCWS922). The scheme provides 80% of LCF bondholders’ principal investment up to a maximum of £68,000 and will be open to all bondholders who hold bonds that have not already been compensated by the Financial Services Compensation Scheme (FSCS).
Now that the necessary legislation has passed through Parliament, final preparations are being made so that the scheme can begin making payments in November. The Government have appointed FSCS to run the scheme on its behalf using part 15A of the Financial Services and Markets Act. The Government and FSCS are committed to providing all eligible bondholders with their compensation within six months.
I would like to emphasise that bondholders do not need to do anything at this stage and should wait for FSCS to contact them about their compensation payment. Further detail on exactly how the scheme will operate, including the scheme rules and frequently asked questions, are available online at www.gov.uk/LCF-compensation-scheme
The Compensation (London Capital & Finance plc and Fraud Compensation Fund) Act received Royal Assent on 20 October 2021 but provision for this was not included in the main estimate for HM Treasury at the start of the financial year. In accordance with normal procedures, HM Treasury will therefore be using a contingencies fund advance to enable bondholders’ access to their compensation payments, ahead of the provision being provided in the Treasury’s supplementary estimate.
Parliamentary approval for additional resources of £120,000,000 for this new expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure estimated at £120,000,000 will be met by repayable cash advances from the contingencies fund.
[HCWS370]