The Financial Conduct Authority has issued a consumer warning on Cavendish Incorporated Limited and its former appointed representative Cottesmore Associates Ltd.
In an update yesterday (August 3), the FCA said it had imposed requirements on the firm and it was not currently permitted to carry out regulated activities without the prior written consent of the regulator.
It said it was aware that consumers may have invested substantial funds in bonds or loan notes issued by Cavendish or through its former appointed representative and warned consumers that their investments may not be protected.
The City watchdog said Cavendish and Cottesmore had carried out investment-related activities with consumers, despite neither having ever been permitted by the FCA to provide regulated investment services.
The Financial Ombudsman Service said it has received complaints against Cavendish Incorporated, currently fewer than 10.
It is unclear whether it will process the claims.
“In general, a business does not have to be regulated by the FCA to raise funds by issuing shares or debt securities (such as bonds or loan notes),” the FCA said.
“However, any investment services provided by firms regarding these investments are likely to be regulated, and subject to our rules.”
It added the actions of the two firms might pose significant risks to consumers due to the potential lack of regulatory protection that would otherwise be afforded to them.
“It is for this reason that we have imposed requirements on Cavendish.”
The FCA urged consumers to remember that engaging with an authorised firm does not guarantee access to the Financial Services Compensation Scheme or the FOS if things go wrong.
sonia.rach@ft.com
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