Investments  

FSCS prepares to assess claims against mini bond firm

FSCS prepares to assess claims against mini bond firm
In an update earlier this month, the FSCS said its investigation involved a review of NPI’s activities.

The Financial Services Compensation Scheme is in the final stages of its investigation into Northern Provident Investments and has started to assess sample claims against the firm.

In an update on its website today (January 24), the lifeboat scheme said that while it has started assessing sample claims against NPI, it wasnot able to process any individual claim.

It added: "As soon as we’ve finished our investigation, we’ll start processing all outstanding claims."

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In an update earlier this month, the FSCS said its investigation involved a review of NPI’s activities and its role in relation to a number of different investments. 

As a result, it said some customers will have valid claims against NPI.

The FSCS said: "We’re now open to claims against NPI, but claims will not be passed to our assessment team immediately. 

"We’re finalising the process that will enable FSCS to assess individual claims against the firm."

What happened with the firm

In August 2021 the Financial Conduct Authority urged customers of NPI to remain alert to the possibility of being scammed after the firm said it planned to enter liquidation.

Later that month, NPI entered creditors’ voluntary liquidation and Jason Baker and Geoff Rowley of FRP Advisory Trading were appointed as joint liquidators.

NPI operated a platform where retail customers could buy debentures and shares, which may be held in an innovative finance individual savings account or stocks and shares individual savings account. Some of these investments were mini-bonds.

NPI had approved financial promotions for issuers of mini-bonds and was linked to the Blackmore Bond scandal.

Blackmore Bond raised millions of pounds from investors to fund property developments between 2016 and 2018, but the company fell into administration in April 2020 owing £46mn to investors after several months of rocky waters in which it failed to pay interest due to bondholders.

In 2020, following the firm’s application to the FCA, the regulator imposed requirements on NPI for it to cease approving any further financial promotions.

As part of these requirements NPI placed a statement on its website that it would no longer be offering this service. 

In August 2021, the sole director and owner of NPI decided to take steps to wind up the firm.

amy.austin@ft.com