London Capital & Finance investors seeking compensation for allegedly mis-sold bonds have said their claims were rejected on the basis of nonsensical and inaccurate information.
The Financial Services Compensation Scheme is analysing more than a million pieces of evidence to assess whether LCF and its marketing partner Surge Financial technically “advised” clients, which would make the customers eligible for recompense. LCF went bust last year, leaving 11,600 investors £237m out of pocket.
The FSCS has used a computer programme provided by consultants Capita to analyse 700,000 recorded phone calls.
Bondholders said the software was spitting out gobbledegook. Transcripts of one saver’s correspondence showed the investor saying “I’ve taken my eyes out” and that they had moved money into their “oyster” or their “isis”, where in reality they had spoken about managing their Isa.
An incoming call from an LCF salesman was transcribed as: “Frankie Valli is Christopher calling from London Castle Finance school.” A spokesman for the LCF Bondholders campaign group said the poorly transcribed calls meant claims were being decided on “guesswork”.
London Capital & Finance collapse
The FSCS said going through all the evidence manually could mean savers waiting up to three years for compensation. It increased the size of the team looking into claims by 80pc in August and said savers unhappy with the result of claims could appeal. Both the FSCS and Capita conceded the technology was not immune from flaws and said the claims process had been lengthy and complex.
They said the transcripts were not used in isolation to accept or reject claims. Where the technology had clearly made a mistake and the words transcribed did not make sense, a human would check the recorded calls.
The FSCS said it was doing its best to ensure compensation seekers received a decision on their claim as soon as possible. It has paid £38.1m in compensation to LCF customers so far.
A Capita spokesman said its system was continually improving and any errors would reduce over time.