Investors who lost money after the failure of London Capital and Finance (LCF) have been given new hope they may be entitled to compensation.
More than 11,000 mainly elderly investors put money into the firm which entered administration at the end of January after netting £236 million by advertising tax-free individual savings accounts.
The Financial Services Compensation Scheme (FSCS) previously said the losses would not be covered as the mini-bond scheme was not regulated.
But the body is looking at “whether there was any regulated advising, arranging or other activities that may trigger our compensation”.
In a statement, the FSCS said: “The promotional materials that we’ve reviewed stated that the LCF mini-bonds were not FSCS protected.
“However, after a further review of LCF’s business practices, investment materials, and calls recorded with investors, FSCS is investigating whether regulated activities were carried out that might give rise to a claim.”
LCF was a high-risk bond scheme with an interest rate of 8% and the Serious Fraud Office has opened an investigation into the firm.
Administrator Smith & Williamson found that money invested in the defunct firm ended up in the hands of a small group of people, including its chief executive.