FCA warned by police about Blackmore 45 times before bond collapse

A Freedom of Information request made by The Telegraph has revealed that the City of London police warned the Financial Conduct Authority 45 times over the activities of Blackmore Bond starting in 2018.

According to a freedom of information (FOI) request submitted by The Telegraph, the City of London Police, which is the national police lead for fraud, first alerted the FCA to events at mini-bond provider Blackmore in 2018, 18 months before it eventually failed.

It subsequently highlighted problems at the company 44 times prior to its demise in April 2020. The majority of those warnings occurred in February and March of that year.

The FCA was first warned about Blackmore in 2017 by independent consultant and whistleblower Paul Carlier. It eventually stopped Blackmore from taking in new money from the UK in April 2019, having been stung into action by the collapse of London Capital and Finance a few months earlier. Blackmore’s subsequent attempts to attract money from overseas went nowhere.

The regulator has claimed that it did not receive any warnings from the City of London Police until February 2020 (when Blackmore Bonds had already collapsed). Why it did not receive the dozens of earlier warnings is unclear as yet.

The City of London Police’s warnings to the FCA followed a total of 71 reports of “alleged fraud” relating to Blackmore, none of which came from the FCA.

The misplaced / ignored warnings raise a number of important questions which go beyond the usual “why didn’t the FCA do anything“::

  • Who made the original reports to City of London Police and why? It’s unlikely to have been Blackmore Bond investors, as in 2018, Blackmore was making all its interest payments on time.
  • The FOI red flags referred to both “Blackmore” and “Blackmore Global”. Blackmore Global is a controversial Isle of Man unregulated investment scheme, run by the same directors as Blackmore Bonds, which, as reported by the BBC, received the pension funds of a number of UK investors. Blackmore Global does not publish audited accounts or performance reports and investors in the fund have struggled to ascertain what their investment is now worth. Did some or all of the 71 fraud reports submitted to City of London Police relate to the Blackmore Global unregulated offshore fund rather than the Blackmore Bonds minibond scheme?
  • What did City of London Police expect the FCA to do? The reports were always going to bounce off the FCA’s “regulatory perimeter” (i.e. institutional culture of ‘not our problem’) and the most likely organisation to make further enquiries into allegations of fraud was either the City of London Police itself or the Serious Fraud Office.
  • Why were none of the concerns reported to the police and the FCA made public until now? When a high risk unregulated scheme is being promoted to the public, the right of investors to be informed trumps the right of the investment scheme not to have its reputation damaged.

Inevitably, an MP (Gavin Newlands, SNP) has called for Blackmore investors to be bailed out by the general public, on the grounds that the FCA failed them in the same way as LCF investors. The Treasury said that a compensation scheme for Blackmore investors is not being planned.

Add comment

Your Header Sidebar area is currently empty. Hurry up and add some widgets.