Lawyer blasts FCA’s refusal to compensate more LCF investors
A lawyer who represented London Capital & Finance (LCF) bondholders has attacked the City regulator’s refusal to further compensate investors.
Thomas Donegan, a financial regulatory partner at Shearman & Sterling, said the decision was based on legal error and argued it should not stand.
The Financial Regulators Complaints Commissioner (FRCC) considered these submissions as part of its report looking into the FCA’s response to the LCF scandal, which found that the regulator’s approach to compensatory payments was “unjustified and does not stand up to scrutiny”.
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It said the FCA should scrap its previous redress decisions, re-run its compensation process and should re-decide the LCF cases in line with a new, adequately justified test.
Donegan said he was surprised to hear the regulator then reject the FRCC’s recommendation and stand by a decision which was based on legal error and should not stand.
He said he was unable to comment on if the bondholders would now launch a judicial review of the FCA’s decision not to follow the Commissioner’s recommendations.
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Read more: A timeline of FSCS payments to LCF investors