The Financial Conduct Authority has rejected most of the criticism by the Complaints Commissioner of its handling of a mini-bond firm's failure.
The regulator said that while it sympathised with consumers who lost money with Amyma Ltd, a firm connected to failed mini-bond provider Blackmore Bond, it did not accept that its early closure of an enquiry into Amyma was unreasonable.
It also did not accept it could have been "more proactive" in investigating Amyma.
The complaints from investors related to Amyma Limited (Amyma) which was one of several firms which marketed mini-bonds from failed firm Blackmore Bond.
Amyma, based in Watford, marketed the high risk "mini-bonds" which promised returns from 6.5% to 10% issued by Blackmore Bond which went into administration in April 2020, with investors losing most of their £46 million investment.
Amyma Ltd acted as an "introducer" and promoted the bonds.
According to a House of Commons Library note, Amyma was accused by some of targeting pensioners and unsophisticated investors. The note added that Amyma was criticised for “high-pressure sales tactics” and for making false or misleading statements about the safety of the investments. Amyma Ltd entered voluntary liquidation on 16 June 2020.
In total Blackmore Bond took £46 million from around 2,800 investors into 11 separate property developments. Around £9.3 million was spent by Blackmore on marketing and management fees, the House of Commons library deposition says.
In a response to the Complaints Commissioner, which reviewed the complaints about the FCA's handling of the Amyma investigation, the FCA said: “The Commissioner concludes that the closure of our enquiry into Amyma in 2017 was unreasonable and finds that we should have taken a more proactive approach from early 2017 to ensure Amyma, which was not authorised by us, was conducting its activities in a compliant way. We respectfully disagree and consider we made reasonable decisions.”
The FCA said it did agree with “some aspects” of the Commissioner’s criticism of its handling of Approved Persons applications connected to Amyma’s appointment as an Appointed Rep in 2018. It also agreed with the Commissioner’s findings in relation to compensation requests by complainants which the Commissioner did not uphold.
The FCA opened an unauthorised business enquiry into Amyma in January 2017 about its promotion of a mini-bond. Amyma was not a regulated firm and was one of several promoters of the bonds from Blackmore Bond.
The Commissioner criticised the FCA for closing the enquiry into Amyma at an early stage but the FCA responded that it had received 13,309 reports about potential unauthorised business in the 2017/2018 financial year and had to prioritise resources accordingly. There was a surge in the marketing of high risk mini-bonds at the time with several of the firms failing.
It said: “We consider our decision not to keep the enquiry open into these other matters was reasonable in the circumstances. We note the Commissioner cannot say what would have happened had we continued with our enquiry.”
In terms of the complaint about lack of scrutiny of Approved Persons, the FCA accepted that it should have been “more joined up” when assessing the Approved Persons applications from individuals at Amyma and given them greater scrutiny. The FCA has since tightened up its supervision of Approved Persons.