Approximately 2,000 individuals lost a total of £46 million when Blackmore Bond failed. It was asserted that a marketing firm employed dubious methods to sell to average consumers rather than expert investors.
The financial regulator has been accused of ignoring warnings about a disastrous property investment plan that led to the loss of people’s life savings.
For two years, the Financial Conduct Authority (FCA) did not interfere.
The FCA stated that it was not its responsibility to intervene, but MPs have requested an investigation.
Former FCA boss Andrew Bailey, who is now the governor of the Bank of England, declined to comment.
The bond was created to invest in UK real estate developments, with the proceeds ostensibly paying back investors. Blackmore offered interest rates of up to 10% per year.
The program, known as a mini-bond, was offered to inexperienced investors while being restricted by law to experienced investors.
The bond failed in 2020 due to claims of questionable sales methods and improper payments. In 2017 and 2018, the FCA received direct warnings regarding a company’s marketing strategies for the Blackmore Bond.
The FCA could have intervened sooner and may have attempted to conceal the fact that it did not.
MPs from across the political spectrum, including members of the Treasury Select Committee, have demanded an investigation of the FCA’s handling of the Blackmore Bond.
Blackmore sufferer Paul Stevens, who was forced to retire due to an autoimmune condition called myasthenia gravis, contributed his disability pension to the fund.
The loss has left him sad, and he claims it has made his disease worse.
“Like many others, our family invested a substantial amount of money and lost £40,000,” he stated. “These schemes must cease, and the FCA must oversee them.”
Jane, his wife, stated, “We feel like we’ve been duped twice: first by Blackmore and then by the FCA.”
An estimated billion pounds are lost annually due to faulty investment schemes. Panorama explores the story of one of them as he challenges the regulators he believes have failed him.
In 2017, financial and banking expert Paul Carlier submitted to the FCA his initial concerns over the marketing of the Blackmore Bond.
His office was adjacent to the corporation entrusted with selling the bond at the time. He overheard their actions and reported them for employing illegal “boiler room” sales techniques.
“[The salespeople] essentially cold-called and approached individuals to sell them a poisonous or useless financial product, including the Blackmore Bond,” he told.
Mr. Carlier stated that the office walls were so thin that he could hear their aggressive tactics, as well as their clapping and high-fiving when they succeeded in convincing someone to invest.
In 2018, he learned that the sales company was still operating and issued a second warning to the FCA, this time to Mr. Bailey, the regulator’s then-chief executive.
Mr. Carlier noted that an additional £10 million or more was invested after he became aware of it, during the remainder of 2018 and into 2019. “It is astounding. I have no idea what else you could have done. I entrusted them to handle things, but they failed to do so.”
As the head of the Bank of England, Mr. Bailey now plays a crucial role in guiding the national economy.
In total, £30 million was put in the Blackmore fund after the 2017 alert.
When Mr. Carlier again protested to the FCA about its lack of action, the regulator – he believes by accident – sent him a draught response with a statement purportedly admitting responsibility. However, I believe there was an opportunity squandered to review and act on the intelligence you supplied.
However, this line was wiped off, indicating that Mr. Carlier was not supposed to see it. He was only able to do so because someone had left the track-changes feature enabled, which displayed a log of all document alterations.
“Someone has attempted to hide that,” he told. This exemplifies the definition of a cover-up.
The FCA has denied that it intended to conceal its actions and stated that the letter to Mr. Carlier was altered because “new evidence emerged.”
Kevin Hollinrake, a member of the Treasury Sub-Committee on Financial Services Regulations, is among those calling for fundamental reform of the regulator: “I’d like to say this is an isolated incident, but the reality is that the FCA has failed in a succession of cases like this, and it has failed here again.”
He also criticized Mr. Bailey and the FCA for their treatment of other failed investment funds, such as London Capital and Finance, which collapsed in 2019 and resulted in the loss of £237 million for 11,600 investors.
This failure led to an investigation by Dame Elizabeth Gloster, a former Court of Appeal judge, and compensation for the victims. Members of Parliament believe that Blackmore should receive the same treatment.
In June, Mr. Stevens and other Blackmore Bond investors explained to members of Parliament and the House of Lords how the failure of the fund affected them.
Baroness Susan Kramer, a Liberal Democrat peer, stated that an investigation was required “to provide some justice to the people who were effectively defrauded in an entirely public and regulated situation.”
The FCA and other authorities have not taken action against Phillip Nunn and Patrick McCreesh, directors of Blackmore.
The FCA has denied responsibility for the investor losses at Blackmore. It stated that it was investigating the approval process for the bond’s promotional materials, but that investors were advised of the dangers and required to indicate they understood them and could afford to lose the money.
Andrew Bailey declined to comment on his performance at the FCA to Panorama.
Phillip Nunn, who has been declared bankrupt about a Blackmore Bond development, did not respond to Panorama’s repeated questioning.
Patrick McCreesh denied any wrongdoing and asserted that the Blackmore Bond was a legitimate, potentially successful enterprise. He stated that the dangers of investing were thoroughly addressed, that vulnerable individual were not targeted, and that Blackmore had ceased dealing with the sales firm that had been reported to the FCA.
Mr. McCreesh also acknowledged that he had made improper business judgments and apologized. He claims to have endured adversity and argues that, as a director, he has always operated ethically and in the best interests of the company.
