The collapse of Blackmore Bonds has once again laid bare the Financial Conduct Authority’s institutional contempt for its objective of consumer protection.
Paul Carlier, an independent consultant known for blowing the whistle on dodgy FX dealings at Lloyds, contacted the FCA on March 2017 to warn them that Blackmore Bonds’ high-risk investments were being missold by an unregulated introducer named Amyma.
They occupy the office next to us and the glass partition means we hear everything they say and do.
In a nutshell Boiler Room. […] They are pushing all manner of these bonds to pensioners citing them as “guaranteed by one of the worlds biggest banks”. […] “Everything is guaranteed” “I’ll put you down as a sophisticated investor”.
[…] And their phone rarely ever rings and assume from the fact that they have to ask people’s names that cold calling in some form is involved.
Carlier received a reply from the FCA to say that his report would be passed to “the relevant areas to consider”. Carlier replied
Please stress to whomever you pass the Amyma info to that pensioners are clearly being targeted.
It’s not just a Boiler shop issue but activity related to misleading pensioners, vulnerable under the new rules.
Carlier continued to press the FCA on the subject over the following years, but the FCA refused to engage with him regarding Blackmore Bond or Amyma.
Carlier was not the only one to warn the FCA long before Blackmore’s collapse. I can reveal that I also contacted the FCA to warn them of the same thing, a year after Carlier did, in early 2018.
I highlighted to the FCA a) the misleading way Blackmore was advertising its bond via social media, with terms like “Income Certainty” “Knowing how to invest your savings doesn’t have to be difficult” etc. And b) how Trustpilot laid bare how many Blackmore investors clearly did not qualify as high-net-worth or sophisticated.
Like Carlier, I never heard anything back beyond a boilerplate acknowledgement.
So what did the FCA do?
Amyma has also marketed Asset Life plc (now insolvent) and Westway Holdings (trading but in default of its obligations to investors).
The only action taken by the FCA in regard to Amyma that is in the public domain was to give it FCA authorisation, via the firm Equity for Growth (Securities) Limited. Amyma Ltd was an Appointed Representative of EfGS from July 2018 to September 2019. This means that the FCA did not authorise Amyma directly; EfGS was ultimately responsible for Amyma’s contact during that period. Why Amyma lost its appointed rep status in 2019 is not publicly known.
In 2019 Blackmore rowed back on its promotional activity following the collapse of London Capital and Finance, first closing to new business and then re-opening to non-UK investment only (despite there being no legal prohibition on it accepting money from within the UK).
However, no action was actually taken by the FCA against Blackmore that is in the public domain. Which given that Blackmore’s bonds were promoted to the general public is the same thing as no action being taken.
Regardless of what happened in the year leading up to Blackmore’s collapse, Blackmore was able to continue misleadingly marketing its bonds via its own social media and via third parties for years after the FCA was made aware of it.
Institutional contempt
Former FCA head and now Bank of England governor Andrew Bailey admitted in June 2019 that the FCA was aware of the systematic misselling of LCF bonds long before it intervened in December 2018. That it did the same with Blackmore is not a surprise.
Why does the FCA focus so much of its attention on issues such as the minutiae of “worst regulation ever” Mifid II, finger-wagging over easy access interest rates, hanging out with Arnold Schwarzenegger and chin-wagging conferences about excellent sheep; while over a billion pounds is lost on the UK on systematically missold unregulated investments, with far-reaching consequences to the wider economy and society?
This is not a rhetorical question.
The tea within the financial industry is that the FCA takes the view that banks underpaying their depositors by £1 billion is more important than people losing £500 million worth of life savings in scams or unregulated investments.
This comes from second-hand reports of private conversations with FCA officials, and the FCA will never verify this in public, so readers can take it or leave it. Personally I take it, because it is a model which consistently explains the pattern of FCA behaviour over a period of many years.
This “£1 billion of uncompetitive interest rates is more important than £500m of lost life savings” credo is of course complete nonsense.
Studies have consistently shown that the stress and misery caused by losing your life savings is comparable to that of losing a limb or a loved one.
By contrast, customers being overcharged for insurance or receiving 0.5%pa less than the best-buy rate causes precisely no misery whatsoever. If it caused them misery they would switch.
If the police took this attitude to crime prevention and prosecution, shoplifting would be priortised over murder on the grounds that £100 stolen from a shop is more important than £50 worth of clothing getting covered in the victim’s blood.
The idea that some banks paying less interest than others is more important than scams because the first involves more money, is a classic example of starting from the conclusion you want and then finding a reason to justify it.
The reason the FCA pays virtually no attention to the loss of hundreds of millions worth of savings in inappriorate high risk unregulated investments is because they view it as beneath them.
The FCA would rather be a vicar than a sheriff. Regulated businesses serve the FCA tea and biscuits in nice London offices and nod attentively when it lectures them about the font they use to disclose their charges. The FCA would rather eat their biscuits than drive up to grotty offices in Bournemouth and Bolton to serve cease and desist notices. But the latter is where action is needed.
We have gone way beyond “Why doesn’t the FCA do something?” The answer to that is the same as when the frog asked the scorpion “What did you do that for?” The question is now “When will Parliament do something about the FCA?”
The FCA has now been leaderless for four months and counting.
The last time the FCA was under interim leadership, London Capital and Finance obtained FCA authorisation, allowing the marketing of its bonds to go into overdrive.
I was tempted to conclude this article “Round and round we go” and call it a morning, but the reality is that the cycle can be broken. We also know how it can be broken.All investment security offerings registered with the FCA, as has been the case in the USA for almost a century, and a top-down reform of the FCA to bring about real and urgently needed cultural change.
It is now up to the Government to choose whether to break the cycle or throw future pensioners and other vulnerable consumers on the bonfire.
Footnote – Philip Nunn speaks – or doesn’t
Blackmore director and co-owner Philip Nunn remains active on Twitter, but appears to be pretending his most famous company doesn’t exist.
Since Blackmore collapsed into administration, Nunn has not had a word to say to his stricken investors, instead restricting himself to offering his services for raising investment in the cryptocurrency industry, and banal nonsense along the lines of “2018 – Everyone is a Bitcoin seller. 2020 – Everyone is a PPE seller.”
Since October 2018 (as far back as I could go), Nunn’s Twitter feed barely mentions Blackmore at all.
Also notable is that in a puff piece in 2018, Philip Nunn was still being introduced as “CEO of Wealth Chain Group and The Blackmore Group”. However, by 2019 Nunn was being mentioned in puff pieces only as CEO of Wealth Chain Group, with no mention of Blackmore.
This is odd because Wealth Chain Group is an obscure one-man band. (A one-man band that owes money to Blackmore companies, according to its 2018 accounts; its 2019 accounts are overdue.)
If you were the owner of two businesses, one a £45 million property firm, and the other an obscure one-man band, why wouldn’t you identify yourself first and foremost as head honcho of the property firm? Especially in 2019, long before the property firm collapsed, when it was still telling everyone that it was on doing great and on course to meet all payments to investors?
Patrick McCreesh by contrast has not updated his Twitter feed since May 2018. Until that point his Twitter activity mostly consisted of retweeted and self-penned Blackmore PR announcements.
The FCA is probably hoping that everyone forgets Blackmore existed as well.
The FCA should be accountable for all the misery investors go through. These people know very well the system and the pray on vulnerable people knowing they will be free to trace again. Sean Murray of Carlauren is free to trade again in bournemouth as a second card dealer and where investors have lost £76 millions in his unregulated Ponzi scheme. The fraud Agency has refused to prosecute him, leaving to a private fraud investigation that is so expensive that will leave this man free to the next scam
As Brev well knows, the FCA have [literally] their own in-house shit to deal with!
https://bondreview.co.uk/2019/11/13/fca-officials-shit-on-the-floor-as-well-as-the-bed/
The FCA’s impotence – along with Action Fraud – is no surprise to anyone, it is reported on year after year, yet it keeps being written up as a surprise!
I personally would like the contentious issue over s.21 sign off, permitting the promotion of these bonds to retail clients, to be settled definitively.
There is a facebook group run by Angie Brooks (I no longer belong to – long story) in which one member posted a “self sophisticated certification” type questionaire/form investors in Blackmore were required to complete, which another member of the group claimed indemnified the promoters of Blackmore from promoting to retail investors.
It seriously confuses me because I can’t find a definitive answer to whether their promotion to retail clients is unlawful in this instance or not!
When it comes to UCIS’s, the legislation is crystal clear, but this situation just keeps doing my head in.
One thing for sure is, if it was unlawful mis-selling by Amyma then this guy Paul Carlier is an independent witness to the conversations. Many victims of Blackmore will not likely have any written evidence of the conversations or mis-selling, or whether “advice” was being given (which is an authorised activity), but if Paul was in the next office and could overhear the conversations then he could be a material withness to “fraud” or “advising” while unauthorised – should any victims wish to pursue an action …. this kind of lead can be just what victims need …. members of the facebook group, if also reading this blog, need to pursue this lead …. up to you … I would if I were facing 100% loss with Blackmore … a class action for tort by deceit, or fraud even, may not be impossible with an independent witness to the conversations.
I also made the FCA aware of the Hudspiths scam TWICE, it took them over 15 month from the first time I alerted them of the scam before they acted.
How many £millions of pounds of client money could have been saved if they’d acted promptly!
Per FCA Handbook COBS 4.12.8 onwards it does not, as promoters relying on such exemptions need to hold evidence on file that the investor actually qualifies as sophisticated.
In addition, if unregulated introducers are specifically recommending a particular unregulated investment to someone, sophisticated or unsophisticated, the criminal offence of carrying on a regulated activity without authorisation – i.e. giving financial advice – comes into play.
Amyma were also one of the biggest fundraisers for Allansons. They appear to be as stinky as Surge.
Surge were a major pusher of these bonds according to the financial press…think they deserve a mention!
Alf…pleased someone has remembered Surge. They were a major seller of the Blackmore Bond according to the financial press.
There should be a good no – well in-depth public enquiry as to why this has gone on and is still going on – and the term sophisticated investor – means they should get qualification of it or deny investment from anyone over a certain age – as they cannot recoup a damn penny from working – and there lives are ruined emotionally as well as their pockets hurt too! FCA needs a revamp – need a restructuring with those well qualified to run as well as work in it – I hope someone out there feels that same that can put this in front of those that can get this done! Far too long overdue…….
Sorry, have to disagree with Brev’s analysis timed at 1037 today. The COBS provisions are right but, being FCA rules, only apply to FCA-authorised businesses.
But people can legitimately work entirely outside of that environment. Interested readers will want to look at articles 27 and 50A of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529 as amended), which only requires the promoter to have a “reasonable belief” that the prospective investor is sophisiticated. That seems a lower bar than the “taking reasonable steps” in COBS 4.12.11 quoted by Brev above – arguably no active steps required, just not holding anything obviously contrary to the certification’s assertions.
I’m sure a lot of readers will be unhappy about that. But the fix is in the hands of our politicians, because it requires a change in the law.
A belief isn’t reasonable if you haven’t taken reasonable steps to establish that it is true. It isn’t a lower bar, it’s the exact same bar, and we know it’s the same because it’s got its name “Reasonable” sewn into its pants.
The COBS rules aren’t an obscure set of Masonic rules that people follow for the sake of following them. If you are relying on an exemption from financial services regulation and that exemption requires your clients to be high net worth or sophisticated, then it should go without saying that they should actually be high net worth or sophisticated. But if someone has to say it to you, it’s in the FCA rulebook and the Financial Promotion Order in black and white.
If you are operating outside the regulated arena so you can service the unique needs of your various high net worth and sophisticated clients, whatever they may be, and one of those clients turns out not to qualify as sophisticated because they lied on one of your forms, that’s their fault.
If they all turn out to be non-sophisticated, or nearly all, that’s your fault.
Guess what? A prodigy of Tweedledum & Tweedledee has flown the nest … or could say deserted the sinking ship Blackmore:
https://www.manchestereveningnews.co.uk/news/greater-manchester-news/meet-ex-banker-big-plans-17782742
Although he has attempted to erase his links with Tweedledum & Tweedledee, he was my daily contact at Aspinal Chase in 2015 when he organised the transfer of my pension offshore and it found its way into Blackmore Global – the sidelined offshore UCIS that’s bleeding 2.5% of people’s pensions, annually to Blackmore Global Financial Holdings Ltd. for “Management Services”, a BVI registered company, out of reach of HMRC!
I made a Subject Access Request on my ceding pension provider and I have copies of the emails to and from them to Aspinal Chase employees that were dealing with my transfer. He signed his emails as Sales Director, Aspinal Chase …. so he can erase his LinkedIn all he likes … I have hard evidence of his past!
It’s the same “prodigy” quoted in this article (para 8+)
https://www.manchestereveningnews.co.uk/business/business-news/derelict-stockport-church-transformed-apartments-12935667
What we don’t know is how he is raising funds for this venture but remember he has been trained by ‘you know who…’ and generally shit sticks ….
Watch this space … the activities of TAG will be closely followed by yours truly, and the first piece of ‘dubious’ evidence I get will be peppered far and wide … I have already been in contact with a journalist at pa.media and shared a shed load of evidence of this bar-steward’s history …
I seriously dislike the ship Blackmore and all who sailed in her!! The ship may be going down, but the deserting rats will not escape scrutiny!
“A belief isn’t reasonable if you haven’t taken reasonable steps to establish that it is true.” That is a fascinating statement.
Any legal examples to support that, that you know of? Or are you making it up?
I know someone that could use that if there were precedents for it.
I do not have specific legal precedents, nor am I making it up, that “reasonable” means the same thing as “reasonable”.
A belief is not “reasonable” because it suited you to believe it so you didn’t bother to look at reality. It is reasonable if you took reasonable steps to match it to reality.
I do not accept that the regulatory perimeter works on the following basis:
Unregulated introducer: I’m going to flog high-risk unregulated investments to all and sundry with no FCA authorisation.
Us: That’s not allowed.
Unregulated introducer: Ah but it is, because all my investors qualify as high-net-worth or sophisticated.
Us: But they don’t.
Unregulated introducer: Yeah but that doesn’t matter because I’m not FCA-authorised.
This is equivalent to the following:
*ding ding* [spotty teenager enters corner shop]
Teenager: I’d like two bottles of White Lightning please.
Shopkeeper: I’ll need to see some ID.
Teenager: I don’t need to show you any ID.
Shopkeeper: Why not?
Teenager: Because I’m over 18.
Shopkeeper: Would sir like original or lemon twist?
You cannot be exempt from financial regulation because you’re exempt from qualifying as exempt, and exempt from qualifying as exempt because you’re exempt. The simplest explanation for this contradiction is that it doesn’t exist.
If precedent is not grounded in the law and logic, an appeal to precedent (or lack of it) just amounts to “that’s not how it’s done”. We’re talking about how it should be done.
Where I agree with Adam Smith is that it is a matter for Parliament. Because whether the law needs to be clarified, or whether it is perfectly clear and the FCA just needs to be stopped from pretending it isn’t, politicians have to act either way. So which it is becomes an academic exercise.
On a less academic level, if all your investors, or nearly all, did not qualify as high-net-worth or sophisticated, that in itself proves your belief that they were HNW/sophisticated was not reasonable. One investor incorrectly self-certifying as sophisticated = their fault. All your investors incorrectly self-certifying = your fault.
“Where I agree with Adam Smith is that it is a matter for Parliament.” … Yeah right, when Nelson gets his eye back … courts can also do the job but perpetrators relying on this argument never see the inside of one ….
It’s an interesting argument but for me, “reasonable” seems so subjective. One person’s “reasonable” is another’s “not reasonable enough”.
It has a wide latitude, and this “sophisticated/un-sophisticated” argument being applied to these mini bonds needs settling. Waiting for Parliament just means many more people will face financial ruin as perpetrators failing with one mini-bond will just pop up like weeds somewhere else, selling another min-bond.
Coincidently, your “spotty teenager” argument is pretty much the argument used by a Guernsey trustee in its defence last November, in a trial brought by a very brave lady fighting for justice but not finding it in the Mickey Mouse jurisdiction.
When the trustee was asked whether they had checked the regulatory licence of the “advisory firm” before appointing them – by the way the firm does not have a licence to give investment advice, that’s a fact, yet was required to have one, fact also – they testified they asked the advisory firm if they had a licence and the advisory firm replied “we don’t need a licence” … the court found in favour of the trustee stating in its judgement “… the Defendant … took the steps reasonably required of it to be satisfied … was qualified and competent to act as the investment manager”.
The adviser was not qualified to give investment advice and the firm was not licenced in its jurisdiction for giving investment advice. These are irrefutable facts, yet the Defendant was deemd to have taken the steps “reasonably required of it…”
So you gave the spotty teenager analogy believing it was a “ridiculous” illustration but it was successfully used in the court …. The same Guernsey court would have said the “shopkeeper, because they asked … took the steps reasonably required of it …” This is the problem with “reasonable” for me!
You can almost hear the Judge chanting: “Justice does not exist, in this court, does it?” … “No Sensei”, comes the reply …
It is going to appeal, scheduled for the summer, Covid permitting.
Something I came across recently in respect of the term ‘reasonable belief’ and I think is relevant to this discussion. HM Treasury came out with a document on this in Nov 2004 titled ‘Informal capital raising and high net worth and sophisticated investors – Changes to the Financial Promotion Order – Government response’
In it it states “Reasonable belief pertains merely to the existence of a signed statement.
Although it would ultimately be a matter for the courts as to what reasonable belief
means in this context, the Government’s intention is that it would be sufficient for an
individual to demonstrate that they have taken sufficient steps to form a reasonable
belief that a signed statement exists. The Government believes that confirmation
(including an oral confirmation) from a potential investor to an individual that he or she
has a high net worth or self-certified sophisticated investor statement would probably
qualify as forming reasonable belief for this purpose.”
“The Government believes that requiring only a reasonable belief of the existence
of a signed statement will avoid imposing a burden of having to undertake any due
diligence in order to form a reasonable belief that a potential investor qualifies as high
net worth or sophisticated (i.e. is correctly certificated). The Government considers that
a reasonable belief of the existence of a signed statement is necessary to protect those
who fit the criteria but do not wish to receive unapproved promotions.”
@Jack That’s very interesting. I shall search for that … unless you have the link to hand … but it just goes to show that “reasonable” to some might be “not reasonable enough” to others and its ambiguity just plays into “scammers” hands ….
Found it … if anyone’s interested …
http://webarchive.nationalarchives.gov.uk/20100407183604/http://www.hm-treasury.gov.uk/d/Informal_capital_raising_responopt251104.pdf