Financial Services Compensation Scheme  

FSCS seeks records for mini bond firm investigation

FSCS seeks records for mini bond firm investigation

The Financial Services Compensation Scheme has requested records from the joint liquidators of Northern Provident Investments to help with its investigation.

In an update today (February 7), the FSCS said it is still investigating whether there are any claims against NPI that meet the qualifying conditions for compensation.

It hopes to complete a review of the records over the next month, after which it will determine whether NPI was engaged in any regulated activity regarding the investments it was involved with. 

If it was, the FSCS will determine whether it protects any of those investments and can pay out compensation.

“If that is the case, we will also need to determine whether NPI owes a civil liability to any customers that would enable them to sue the firm in court,” the lifeboat scheme said.

Back in August 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.

On August 20, NPI entered creditors’ voluntary liquidation and Jason Baker and Geoff Rowley of FRP Advisory Trading Limited 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 £46m to investors after several months of rocky waters in which it failed to pay interest due to bondholders.

Last March, conservative MP Peter Gibson called for an independent report into the Blackmore Bond scandal to investigate exactly what went wrong and criticised the regulator for 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 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. 

On August 6, 2021, the sole director and owner of NPI decided to take steps to wind up the firm.

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