View more on these topics

FCA cleared of failure to investigate ‘fraudulent’ bond provider

Blue purseA complainant is seeking the value of a £5,000 bond in compensation from the FCA, saying the regulator failed to fully investigate the “fraudulent” firm which sold it.

The complainant lost money after purchasing an unregulated £5,000 corporate bond from an unnamed company on behalf of an entity in Switzerland last year.

An agreement to invest had been signed when the complainant contacted the FCA to query the cooling off period.

In a ruling published today, Complaints Commissioner Antony Townsend says the FCA informed the complainant that that the provider was not regulated.

The watchdog also suggested the complainant seek legal advice and contact the Citizens Advice Bureau if they intended to buy the bond.

The bond was purchased on 3 May 2017 without consultation with the CAB.

The complainant did not accept Townsend’s preliminary decision in favour of the regulator after losing the money they invested, however.

The FCA failed to investigate further after they flagged potential fraud and did not assist with the recovery of losses, the complainant alleges.

The regulator had informed the complainant of a potential scam but did not pass on details of the firm to its Unauthorised Business Division, the complainant says.

Townsend has found this did not contribute to the financial loss the complainant then experienced.

He says: “It appears you did not phone the CAB for advice but instead chose to proceed with the purchase of the bond. It is very unfortunate you lost your investment but that is not the fault of the FCA.

Complaints Commissioner sides with FCA over late fees charge

“I consider the FCA member of staff gave you sufficient information and guidance to enable you to understand that the [firm] and the bond they were trying to sell you were not regulated; to explain to you what your options were with respect to the purchase and what to do if you did not wish to go through with the purchase; and to warn you that cold callers asking you to invest over the phone could be fraudsters.”

The complainant is asking for another independent arbitrator or adjudicator to rule on the case, but Townsend says this is not possible given the Complaint’s Commissioner has responsibility for such complaints.

The complainant may bring the Commissioner’s decision and review to court at their expense, however.



Fears protection commission disclosure will turn clients off advisers

As new disclosure rules bring the full extent of protection commissions into the spotlight, experts are asking if this will see clients ditch their advisers in favour of execution-only services. Under the Insurance Distribution Directive, from 1 October advisers have had to provide clients with information before a product sale about any commission received, which […]


Pensions minister: Simple statements are long overdue

Making pensions simple for everyone to understand is one of my key missions as a minister. Simple, two-page, standardised pension statements, the pensions dashboard for online access to pensions information, an industry provided mid-life MOT are clearly the way forward. Traditionally, pensions are complex. We want to change this. If something is impenetrable, people shy […]


National IFA cuts network ties to go DA

National IFA Continuum Financial Services has decided to cut ties with the Caerus network to become directly authorised. The 38-adviser firm says that with assets under influence set to exceed £1bn in the next 18 months, it has opted to go directly authorised so it can have greater flexibility over its client and adviser proposition. […]


How advisers invest: ‘We buy managers, not funds’

KW Wealth chief investment strategist Richard Stammers on retaining control of its investment management and involving clients in decision making Is your approach to investment management in-house, outsourced or a combination of both?We do it ourselves. We have two businesses – the wealth platform and the investment management business. Our view is that wealth management […]


News and expert analysis straight to your inbox

Sign up


There are 7 comments at the moment, we would love to hear your opinion too.

  1. Unregulated investments again, when will people learn. When you speak to anyone they all know the saying “If it looks to good to be true, it is”, yet greed seems to win the argument. Its only when the money has gone, it must be someone else’s fault.

    • In this case I tend to agree with you, Martin, as the bond purchaser had concerns enough to call the FCA and, on the face of it, they provided a warning about the situation. Why they still went through with it is a bit mystifying, unless it was a case of pure greed.

      In a general sense, however, I do sympathize with many people who (genuinely) just don’t have the brains to work out what is, or isn’t in their own interests, and fall for these scams. Sometimes we just, maybe, should decide to look after people less able than ourselves, through no fault of their own, other than that they were either born without much intelligence or have become old and lost a bit in the process.

      • There is significant evidence that people, and not just people of low intelligence, don’t always act in their own interest.

        I bet even you’ve done it.

        I certainly have. I eat food I like, which I know is not optimal, including sweet things, and occasionally alcoholic things.

        I waste time doing things I enjoy rather than furthering my own long term interests.

        And if anyone tries to paternalistically control my actions I shall disagree with them, even though they are right.

        So this is money rather than health, and life, so therefore far more/less important (depending on point of view), but so what?

        If we believe in legislating away people’s rights to lose their money in scams, we should start taking away self determination with cigarettes and alcohol which do more social harm and cost more money than scams.

        It is regrettable that this fool was parted from their money but provided they had legal capacity it is no one’s responsibility other than their own.

        If they didn’t have capacity then it is the responsibility of the entity that held their power of attorney.

        If they did have capacity but shouldn’t have then it is potentially the responsibility of whoever had the opportunity to make that call but didn’t.

        It is absolutely, definitely, definitively, morally, legally not the responsibility of the FCA, or FSCS, or any other statutory body, or regulated entity, and should not become so, unless we are abolishing private possession of money.

        CAB was available, but not availed of. If they didn’t contact CAB what on earth makes you think you deciding to offer help would have made a difference.

        Many of us will provide some pro bono assistance if sought, but stick your neck out to try and force people to take it, and you will find it an uncomfortable place to be.

        • I am not sure why you seem to have taken offence at what I have said, unless I have misunderstood what you are saying. You sound as if you are intimating I said this punter should be compensated by the FCA and that I feel sorry for them. If that is the case I think you owe me an apology because you haven’t actually read what I said properly.

          This was the first part of my comment.

          “In this case I tend to agree with you, Martin, as the bond purchaser had concerns enough to call the FCA and, on the face of it, they provided a warning about the situation. Why they still went through with it is a bit mystifying, unless it was a case of pure greed”.

          Does that sound like I feel sorry for this person? No, I don’t.

          I am quite clear that I am blaming the investor, as it seems their greed was too strong for them to resist their other instincts and the warnings they were given by the FCA.

          If, however, you’re simply disagreeing with the second part of my post, and general view, that totally incompetent and vulnerable people, possibly some of the elderly, some of the disabled or educationally subnormal people, do need some protection from fraudsters, and other crooks, I don’t understand that.

          Surely you don’t think those people deserve everything they get, including being scammed?

  2. I have no sympathy with the complainant. S/he should have checked with the FCA BEFORE investing, not after, and the FCA would have made quite clear that no consumer protection/s would be available.

    • As you rightly say, Julien, it would have been better for the complainant to have checked with the FCA before agreeing to invest but the article implies that the the complainant actually proceeded with the investment AFTER they spoke to the FCA and received the warnings. Which is why I have little sympathy for this, particular, person, as do you.

  3. What I find most unpalatable about this is that the complainant still seems to believe that it’s everybody else’s fault rather than his/her own.

    Why do so many people seem unable to accept the outcomes of their own failings (and not just in our industry)?

    What a pathetic specimen.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm