LCG Might Pay £7.7m
There is a strong possibility, that the London Capital Group (LCG) might pay recompense amounting to £7.7m after a new appraisal had been made by the Financial Ombudsman Service (FOS) pertaining to customer complaints concerning commission rebating of a spot FX fund set up in the first half of 2009.
According to a LCG statement today, at first it thought the financial impact on the group would “that severe” to date only one client incurred costs of £100,000. However, it added that a revised estimation from the FOS was received on the 11th of February and losses suffered by all clients in the fund could total in excess of £7.7m. Reports estimate that as many as 112 other clients could receive compensation.
“Based on a previous decision given by the FOS in with regard to this case, we anticipated that the impact of the FOS investigation would be of no consequence on the business,” explained the report from the financial spread betting company.
According to reports from financial publication IFA Online, the problems purportedly arose since many “clients’ accounts were jointly overstated;” with prosecuting lawyer Alasdair Sampson suggesting that “in effect all the accounts were over trading so any losses were inflated.”
The quantity of the loss for which LCG could be legally responsible, as well as the date when payments would be requisite, has not been set. Nonetheless, the group has given assurances that it has adequate resources to meet a liability up to the total amount of the fund.
LCG stated it no longer participates in any funds comparable to the one in question and has not done so ever since the closure of this particular fund in 2009.
Simon Denham chief executive of LCG was not available for comment.[addtoany]