Investors in collapsed mini-bond provider Basset & Gold may be eligible for compensation.
The bonds were promoted and arranged by its parent company B&G Finance, which was authorised by the Financial Conduct Authority (FCA).
The Financial Services Compensation Scheme (FSCS) has determined that the bonds were mis-sold and that many investors who bought their mini-bonds through B&G Finance may be able to claim compensation up to the £85,000 limit.
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“While this investigation may share similarities with London Capital & Finance (LCF), B&G Finance operated under a different structure,” FSCS said.
“It did not issue its own bonds but arranged for customers to buy bonds issued by a different firm.
“LCF issued its own bonds – which we consider is not a regulated activity – whereas B&G Finance carried out the regulated activity of arranging. Because the other requirements under our rules are also met, we may be able to protect many customers of B&G Finance.”
Basset & Gold fell into administration on 1 April, after putting the majority of investors’ funds into payday lender Uncle Buck, which collapsed the previous week.
It was believed to have had around 1,800 customers who had collectively invested £36m.
The collapse was another blow to the reputation of the mini-bond sector, following the high-profile demise of LCF in 2018, which left 11,600 investors at risk of losing a combined total of £240m.