Investors in the collapsed London Capital & Finance have so far received more than £56m in compensation as the industry's lifeboat body nears the end of its review process.
In an update today (February 18) the Financial Services Compensation Scheme confirmed it had now paid 2,878 bondholders who held almost 4,000 LCF bonds.
Following a drawn-out process the scheme said today it was close to having paid all LCF investors eligible for compensation.
The FSCS said: "We appreciate that LCF customers have been waiting patiently while we continue to review claims on a case by case basis. It has taken longer than we anticipated, as we have continued to identify and analyse more evidence which could result in us protecting more customers.
"We remain committed to ensuring that each piece of evidence and each claim gets the attention it deserves."
Last year the FSCS increased the size of the team reviewing LCF claims by almost 80 per cent as it pushed to complete the process by December 2020.
LCF collapsed in 2019 owing more than £230m, and putting the funds of some 14,000 bondholders at risk, and has been embroiled in scandal ever since.
Stocking the FSCS levy
The FSCS has repeatedly cited the millions being paid to LCF bondholders as one of the main drivers behind its increasing industry levy.
In November, the scheme said it was forced to raise a £92m supplementary levy following an increase in pension advice claims and other high profile firm failures, such as LCF.
But in an update in January the FSCS said there had been fewer LCF claims upheld than originally forecast in November 2020, and it could therefore knock down the cost.
As a result the 2020/21 supplementary levy dropped to £78m, £14m less than the £92m forecast in November 2020.
Ongoing judicial review
In today's update the FSCS said it was awaiting the outcome of the judicial review on LCF before confirming the "next steps" for those investors who had not received compensation.
LCF bondholders launched the review in March last year but only received the go ahead for the case to be heard in court months later after an attempt to have the case dismissed by the lifeboat body was refused.
The judicial review came as investors fought for greater compensation from the FSCS, an issue of much debate over the past year with mini-bonds falling outside the scheme as unregulated investments.
Last year the FSCS announced it would not seek to enforce any costs order against the investors bringing the judicial review, meaning if bondholders lost the case the lifeboat body would not recover legal costs from the group.
On the first day of the case last month the court heard from the investors' lawyer that the Financial Conduct Authority had been "slow" to identify the risk presented by the minibonds issued by LCF.
It was a warning echoed by the independent investigation, led by Dame Elizabeth Gloster, into the regulator's handling of the LCF scandal.
