London Capital delays results over FOS ruling

London Capital Group (LCG) has delayed its 2010 results while it works out how much compensation it must pay investors who lost £7.7m in its managed spot FX fund.

The online trading company - not to be confused with independent wealth management group London & Capital - was due to publish its full-year results today but says it will now release them before the end of March.

LCG's board says it needs time to study an unfavourable FOS ruling but expects to set aside "materially less" than the £7.7m total losses on the fund for investor compensation.

Earlier this month a FOS adjudicator ruled LCG must pay £100,000 in compensation plus interest to an investor in its managed spot FX fund.

The FOS investigation found inflated client balances and magnified losses linked to commission rebating in the Integrity Managed Currency Growth fund in the first half of 2009.

Lawyer Alasdair Sampson, who acts for the investor and 114 others with near-identical claims, says LCG faces compensation costs of up to £5.5m if all the FOS complaints succeed.

The company says it is challenging the decision, but is working to ascertain an appropriate provision to make for any potential liability arising from the FOS's assessment.

LCG was forced to u-turn on a previous statement earlier this month which said redress costs would be "immaterial".

The company says full-year pre-tax profits, before share based payments, software impairment charges, and the above mentioned exceptional item, is in line with current market expectations.

LCG says it has a strong balance sheet with net cash resources of £13.95m as at 31 December 2010.