Dod101 wrote: GeoffF100 wrote:
I looked at the first failure on the list: London & Capital Finance:"After LCF entered administration, FSCS carried out an extensive and complex investigation into how LCF operated. Our aim was to determine if any of the activities LCF carried out were regulated, as this is the only way its customers could be eligible for FSCS compensation."
If they were not regulated, why should the FCA be paying compensation? (The government is also paying compensation that is not covered by the FSCS.) Do investors not have a duty to check that a financial services firm is on the FCA register before investing their money? We also have banks being made to compensate people who give away their money to scammers. Ultimately, we all pay for this.
These comments are all somewhat confusing. If the FCA or the Government are paying compensation anyway, whether the firm is regulated or not what is the point of regulation? And why then should investors check that a financial services firm is on the FCA register if it makes no difference?
The FCA does not appear to be good at proactively identifying companies that are carrying out regulated activities. It should reduce the number of claims (which is the point of the consultation) if they only have to look at registered firms.
The present situation appears to be confused. The FSCS recently did not pay compensation when a money transfer firm was permitted to hold client money for three days, but held it for longer. In that case, they do seem to have taken the position that the client should have checked the register.
The difference between the two cases may that the LCF clients were perceived to be more deserving in some way than the money transfer clients, certainly as far as the government element of the compensation is concerned.