The collapse of mini-bond provider Basset & Gold demonstrates the risks of products being mis-marketed, a law firm has claimed.
Basset & Gold’s Innovative Finance ISA-eligible products were marketed as ‘pensioner bonds,’ which Glyn Taylor, support lawyer at APJ Solicitors, said created a risk that investors could conflate them with government backed NS&I guaranteed growth bonds.
“One of the concerning aspects of the Basset & Gold mini-bond collapse related to many of the investors not appreciating that the investment wasn’t safe and secure,” Taylor said.
“The bonds were also promoted to senior citizens, and many thought the bonds were similar to the government-backed pensioner income-backed bonds.
“It is likely we will see other mini-bond failures leading to many investors facing an uncertain future with the prospect of losing their money.”
Basset & Gold entered administration in April, after putting the majority of investors’ funds into payday lender Uncle Buck.
The mini-bond provider is believed to have had around 1,800 customers who had collectively invested £36m.
“B&G Plc and [related company] B&G Finance took independent solvency advice after the Financial Conduct Authority (FCA) raised concerns about the viability of the B&G mini-bond scheme because the money raised from the mini-bonds was almost entirely invested in Uncle Buck,” said a statement on the FCA’s website.
The Financial Services Compensation Scheme has since said it believes the products were mis-sold so investors could take legal action.
There is currently a temporary ban on the marketing of mini-bonds to retail investors that was introduced this year and the FCA is seeking to make this permanent.
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