Financial Conduct Authority  

FCA ‘human error’ meant not all Blackmore info was given to police

FCA ‘human error’ meant not all Blackmore info was given to police

The Financial Conduct Authority did not share its full intelligence findings about the Blackmore Bond scandal with the City of London Police due to ‘human error’, its chief executive has said.

In a letter to the chair of the Treasury committee, Harriett Baldwin, in December 2022, Nikhil Rathi said not all information was shared between the FCA and City of London Police relating to the Blackmore Bond issue, in which 2,000 investors lost £46mn.

“Regrettably human error [by the FCA] meant that the full suite of information was not sent across,” he said.

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Rathi also said the City of London Police shared intelligence with the FCA, but not until February 2020.

A Freedom of Information request released by the City of London Police shows that 45 action fraud reports, where a member of the public can report a scam, relating to Blackmore were sent to the FCA.

The first of these was July 2016, with the majority sent in February 2020.

Rathi also countered a claim by Labour MP Siobhain McDonagh that the FCA said it "missed an opportunity to act" in relation to the mini-bonds scandal.

“Any suggestion that the FCA took no action in relation to Blackmore would not be correct," he said.

The allegations refer to a draft letter to a whistleblower where the FCA said there may have been a “missed opportunity to act” on intelligence provided about the scandal.

The letter was never sent and in his statement in December Rathi said new evidence meant that the FCA now believes it did not ignore information received in 2017.

The scope of the FCA’s powers have been called into question as a result of the scandal.

Blackmore Bond was set up in 2016, and until 2018 ran an investment scheme where potential clients were offered mini-bonds with an attractive level of interest.

As these products, as well as Blackmore itself, were unregulated, neither had to adhere to the FCA’s rules and regulations. 

The promotion of these bonds was approved by Northern Provident Investments, which, after FCA involvement, withdrew this approval in March 2019.

Blackmore eventually collapsed into administration in April 2020, depriving 2,000 investors of £46mn, much of which was never recovered.

Blackmore used a marketing agency, Amyma, to promote the bonds.

The FCA took the company’s website down, and in the letter released today Rathi countered allegations that the regulator ignored intelligence related to Amyma.

“We do not agree with the assertion that we ignored intelligence about Amyma received in 2017.”

Back in October, the Financial Conduct Authority said it was looking at the Blackmore Bond scandal in the same “forensic detail” as it has done with the London Capital & Finance scandal. 

Speaking at the regulator's annual general meeting (AGM) at the time, the FCA’s executive director of enforcement and market oversight, Mark Steward said the regulator’s focus in relation to the bond scandal has been focused on the way in which those financial promotions operated.