Regulation  

FCA intervenes to wind down boiler room

The Financial Conduct Authority has intervened to wind down an unauthorised financial services firm who arranged at least £660,000 worth of overseas property investments.

On 18 March 2014, the High Court made a winding up order against First Capital Wealth Ltd after securing a worldwide freezing order in November 2013.

FCW had been promoting the sale of membership shares in a company called Berkeley Brookes LLC without the required FCA authorisation.

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The FCA said it adopted “aggressive and persistent sales practices” as well making unsolicited calls to investors.

The callers claimed Berkeley Brookes was intending to construct a luxury development of 20 villas on a plot of land next to a golf course on the island of Madeira and that investors would receive guaranteed returns of between 25 per cent and 128 per cent following a one to three year investment.

Between June and October 2013, FCW collected approximately £660,000 from 27, mainly UK-based, consumers. The FCA is aware that many consumers invested tens of thousands of pounds with the company.

The FCA said it intervened to wind up FCW because it was unauthorised and it also had concerns about FCW’s ability to repay investors.

As FCW was unauthorised, customers who invested through the firm have no recourse to the Financial Ombudsman Service or the Financial Services Compensation Scheme in relation to their investments.

In November 2013, the FCA published a consumer warning about FCW which said it was providing financial services despite not being authorised and also secured a worldwide freezing order in the High Court.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “FCW was promising guaranteed returns that, in our experience, are simply not achievable. Protecting consumers from unauthorised businesses is a vital part of the work we do but many people still lose money as a result of such investments every year.

“If you are called out of the blue by someone seeking to sell you shares our advice is to put the phone down.”

Until the liquidator has completed its investigation into the company’s activities, the FCA is unable to confirm whether any funds will be available to return to investors.

The FCA said it will pass the details of investors to the liquidator who will contact them in due course.