The Financial Conduct Authority has urged customers of Northern Provident Investments to remain alert to the possibility of being scammed after the firm said it was planning to enter liquidation.
Last week (August 6), Northern Provident Investments (NPI) proposed entering creditors’ voluntary liquidation and appointing partners from FRP Advisory Trading Limited (FRP) as its liquidators.
The FCA said it believes there is a high risk of scammers trying to take advantage of the investment firm's customers.
Northern Provident Investments 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.
The FCA said: “Given the large number of mini bonds that NPI distributed via their platform, we believe there is a high risk of scammers trying to take advantage of NPI’s liquidation to try to defraud customers.
“We are notifying NPI customers of its proposed liquidation and warning them of the danger of scammers contacting them. As part of this we are setting out the steps customers should take if contacted by people claiming to be from NPI or FRP."
Northern Provident Investments 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 last year owing £46m to investors after several months of rocky waters in which it failed to pay interest due to bondholders.
In March, conservative MP Peter Gibson called for an independent report into the Blackmore Bond scandal to investigate exactly what went wrong while criticising the regulator as not being “fit for purpose”.
At the time, a spokesperson at the regulator pointed out that neither Blackmore Bond nor the mini-bonds it sold were regulated by the FCA.
The FCA spokesperson said: “As a result of steps taken by the FCA, Northern Provident Investments, which had approved Blackmore’s financial promotions for communication to the public, withdrew its approval, preventing the promotion of the mini bonds.”
In February 2020, following the firm’s application to place the firm into liquidation, the regulator imposed requirements on Northern Provident Investments for it to cease approving any further financial promotions.
As part of these requirements Northern Provident Investments placed a statement on its website that it would no longer be offering this service.
On August 6, 2021, the sole director and owner of Northern Provident Investments decided to take steps to wind up the firm.
All known creditors were contacted with the formal notification of the process and it is proposed that licensed insolvency practitioners from FRP will act as joint liquidators on August 20, 2021.
However, the FCA warned that all customers should remain alert to the possibility of fraud.
“Fraudsters sometimes claim to be from legitimate firms authorised by us, or (in the case of liquidation) their appointed liquidator.