The Financial Conduct Authority has said it will not issue compensation payments or launch a criminal investigation in relation to the Blackmore Bonds case.
Today (February 6) the regulator wrote to those who had complained about the unregulated firm which issued mini-bonds.
Blackmore Bonds was set up in 2016 and, until 2018, ran an investment scheme where potential clients were offered mini-bonds with an attractive level of interest.
The FCA said as the company was unregulated it did not have oversight of it.
In a letter to complainants it said: “We do not agree the FCA failed to act or failed to take action in respect of Blackmore and its associated entities. Further, the FCA was not the cause of any loss to investors in Blackmore. The failure of Blackmore (an unregulated entity) was the cause of these losses.”
Though the regulator said it would not pay compensation in relation to the case, it did agree to make a payment of between £150 and £250 to each complainant in recognition of how long it took to respond to the complaints.
It apologised for the time it took to respond to complaints and for the losses suffered by investors.
The regulator added: “We are sorry you have suffered financial loss and have a great deal of sympathy for your situation. Losing any sum of money can be deeply upsetting and a cause of significant worry and frustration.
“We are also sorry for the length of time we have taken to respond to your complaint. However, it was important that we allowed the FCA’s enforcement investigations to conclude. This meant the investigation of your complaint was deferred between June 8, 2021 and December 6, 2023.”
The letter explained that mini-bonds are “essentially an IOU which a company issues to an investor in exchange for a fixed rate of interest over a set period”.
It said these are generally sold to raise money to lend to a third party or invest in other companies or property.
In January 2020 the FCA issued a ban on promoting mini-bonds to retail investors, which became permanent the following year.
Over two years, Blackmore bonds issued six mini-bonds saying there was a shortage of housing in the UK which provided an opportunity for investors to profit from the resulting demand.
In December 2023, the FCA decided not to take enforcement action against the two firms which approved the financial promotions of the bonds, NCM Fund Services and Northern Provident Investments.
tara.o’connor@ft.com
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