Yahoo Finance Investors of mini-bond firm urged to claim as it goes into default
Around 2,000 customers of failed mini-bond firm Independent Portfolio Managers (IPM) could be eligible for compensation after the Financial Services Compensation Scheme (FSCS) announced that the firm had gone into default this week.
Investors in the company lost millions on the failure of two mini bonds that the firm had promoted and many of its customers still have outstanding complaints with IPM and the Financial Ombudsman Service.
Jimmy Barber, chief operating officer at FSCS, said: “We estimate that 2,000 UK customers may be affected by the failure of IPM. However, the value of potential negligence claims is still unknown.
“We encourage all former IPM customers who think they might be entitled to compensation to make a claim on our website right away.”
Customers who think they may be entitled to compensation should visit www.fscs.org.uk/your-claim.
Last year the firm was ordered to halt all regulated activity by the City regulator after it emerged that in 2015 Secured Energy Bonds failed with £7m in investors’ cash, followed by Providence Bonds in 2016, which went into administration with £8m in investor money.
Both had their promotional materials approved by Independent Portfolio Managers, a company regulated by the Financial Conduct Authority (FCA). Without IPM’s involvement, the bonds could not have been advertised to private investors.
In the case of Providence Bonds, administrator Deloitte found that investors' money ended up in the hands of Brazilian companies linked to an alleged fraud, rather than for its stated purpose.
Mini-bonds, unlike “retail bonds”, are unlisted, meaning there is little protection for investors if things go wrong.
They are a way for companies to borrow money from people in return for higher than normal income payments over several years.
Investors will earn a return each year and will receive their full amount back at the end of the term, or at least that is the theory.
At the time, the administrators of the two bust firms gave little hope that any assets would be recovered, so investors attempted to complain to the Financial Ombudsman about IPM’s role instead. They argued that the involvement of an FCA-regulated firm implied that the promotions were not misleading and that the regulated company was taking responsibility for the contents.
Initially the ombudsman said the failure of the mini-bonds was not within its purview, as the investors were not considered customers of a regulated firm. However, earlier this year it reversed that position, allowing investors to complain about IPM.
It is not clear when the firm was told to stop regulated activity. The FCA said it could not comment on individual companies.
IPM is led by directors Anthony Curtis, Christopher Day and Martyn Ingram.
Individuals who breach FCA rules will typically face greater scrutiny if they apply for approval from the regulator again in the future.
IPM did not respond to requests for comment.
Action groups have been set up by investors for both Providence Bonds and Secured Energy Bonds. They can be reached on providencebonds.iag@gmail.com and secured.energy.bonds.iag@gmail.com.
