Harewood Associates offered unregulated investments in property from 2010 onwards. From at least 2013 the company offered unregulated loan notes, with typical rates of up to 12% per year.
Last week Harewood went into administration, with Begbies Traynor appointed as administrators. The administration is not yet visible on Companies House but has been publicly announced by Begbies Traynor.
According to Harewood Associates’ last accounts for December 2018, the company owed £32.8 million at that time. If accurate, this makes Harewood the second biggest collapse of a company issuing unregulated bonds directly to the public in 2019, beating MJS Capital‘s £20 – 30 million (though dwarfed by the £230 million of London Capital & Finance).
Harewood was fronted by David and Peter Kiely and was, according to its website (now offline), highly active in the community with charitable activities funded by investors’ money.
Harewood Associates was issuing unregulated investments to the public as early as January 2013, according to a Moneysavingexpert forum thread.
In 2016 Harewood Associates claimed on their website that they did not require FCA authorisation to promote investments to the public as they were property related.
Are we FCA regulated and is investment covered by the FSCS? [sic]
No we are not FCA regulated. All our investments are property related and therefore the Law and Property Acts apply. As we only deal with our own property deals and do not sell or promote others we do not need FCA authorisation.
Selling individual properties to an investor is indeed not covered by UK securities legislation.
Selling loan notes, however, most definitely is. On the same 2016 page in which they claimed not to require FCA authorisation, Harewood confirmed that their investments were “by way of a loan note arrangement secured against a share on a fixed asset”.
It was also made clear throughout that investors were investing money on the promise of a fixed return by Harewood, and not for the variable return of an individual property investment.
If any further confirmation is needed that investors were investing in Harewood and not property, one only has to look at Harewood’s last accounts.
Harewood’s 2018 accounts claimed the company had £4.5 million in net assets (assets minus liabilities), but made a £4.3 million loss in 2018, failing to even cover their gross cost of sales. As the accounts were unaudited, the accuracy of these figures will be uncertain until the administrators have provided further information.
In September 2017 the Telegraph warned investors of the risks of investing in Harewood, which at that point was offering up to 12% per year.
As early as February 2017 investors were complaining of not being paid on time, according to a complaint on Ripoff Report.
Meanwhile Harewood was merrily misleading its investors about the risks of investing in itself, with the usual wearily familiar spiels of misleading comparisons with FSCS-protected deposit rates, claiming that secured loans can’t go wrong, and claiming that past performance is a guide to the future.
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Nearly all other investments offering such an attractive return are subject to fluctuation. The fixed return option from Harewood offers a predictable level of income.
The investment is secured on increasing value assets
We have a 100% track record in generating returns for our investors. Our team have developed in excess of 2000 residential properties and we have never sold a property at a loss.
Throughout the 9-year period in which Harewood offered unregulated investments to the public, of which at least 6 years were spent promoting investments in itself without FCA authorisation, resulting in over £30 million of capital now at risk, the Financial Conduct Authority did… the usual. Not even a warning about Harewood Associates appears on the FCA register.
Exactly what caused administrators to be called in has not yet been revealed. The administrators confirm that Harewood investors cannot be paid and the prospects for recovery are not known.
We are aware that a number of fixed period investments were due to have matured on 1st June 2019. Unfortunately the Company’s insolvency means that no investments can be repaid on their due dates. We are not yet in a position to advise investors as to what monies, if any, they may recover in due course.
The administrators have asked investors not to contact them directly as they cannot cope with the volume of enquiries.
Due to the volume of enquiries being received in relation to this matter we are unfortunately unable to speak to investors individually as this would prevent us from performing our duties.
As always we’ll bring you more as and when the administrators release updates.