The appalling way that Secured Energy Bond investors have been treated by government and regulators thus far offers a sign of things to come when other risky investments start to fail

The treatment of the 973 investors in the now defunct Secured Energy Bonds (SEB) by the government and regulators opens up questions that go far beyond this one mini-bond product.

The failure to act to protect these investors offers a glimpse of how future unfortunate savers will be treated when other “unregulated” products like peer to peer lenders and others go bust. And what is more the government should bare more than a little of the responsibility, given that it has been the ongoing bailing out of the banks that has forced savers toward ever more risky products - in search of some sort of return on their income.

The SEB investors, lest we forget, put their money into what on the face of it was a good investment. The funds raised were to be used to buy solar panels to fit on 22 schools across the UK. The return 6.5% over three years.

Not an outrageously risky investment on the face of it. Had SEB then done what the promotional material said they were going to do, all would have been well. But instead, the Australian parent company CBD Energy decided to siphon off around £4.2 million for other purposes.

Now the investors want their money back. After encouraging noises from both the Financial Conduct Authority (FCA) and Treasury minister Harriet Baldwin, directing investors toward the Financial Ombudsman for restitution, the wind suddenly changed. Baldwin sheltered in behind the FCA, which was now qualifying its statements to the effect that the FO may not be able to do what investors wanted.

The FO has behaved in the most contrary way, first producing an adjudication to the effect that they could look at investors complaints, then another adjudication saying almost the mirror opposite - that they couldn’t. So what is going on?

For the SEB investors it is now a case of seeing whether an ombudsman will actually look at their claims and find in their favour.

However, there is a much wider policy issue here concerning compensation for investors who have put their hard earnt money into more risky investments. A qualifier should be added here, regarding Secured Energy Bonds, to the effect that had the investors funds been used for the advertised purpose this was not a risky investment.

And it is here that the government and regulators have to step forward and take responsibility. The present approach of pass the parcel, at present being deployed against SEB investors simply will not do.

There was a time not that long ago, when banks were still offering an acceptable fixed rate return on investments. Then along came the government with its latest reward to the banking industry for its reckless behaviour in causing the financial crash of 2008. This reward was the Funding for Lending Scheme which provided tax payers money to the banks to get lending going again in the economy. The banks took the money. However, what the latest piece of largesse from the tax payer did do was remove the need to provide any sort of reasonable rate to investors looking to deposit their money.

The result, savers had to look elsewhere to find any sort of return. The inevitable consequence has been documented with investors turning to more risky products like mini-bonds, crowdfunders and peer to peer lending.

The government has done much to promote the, for the most part, admirable peer to peer lending sector - seeing this as another avenue by which it can get money lent out in order to get the economy going. (Something lest we forget that the banks, having crashed the whole economy in the first place, have singularly failed to do – no matter how big the inducement).

Now, what the plight of the SEB investors exposes is the tip of what could be a very nasty iceberg. When other schemes, whether they be peer to peer, mini-bonds or whatever, go belly up in the way SEB has, what will the government and regulator response be? Certainly, the simple nothing to do with us mate or a rereading of caveat emptor (let the buyer beware) will not do.

Savers have been hung out to dry time and time again since the financial crisis of 2008. The low rates on offer to savers are a reflection of a system skewed totally to propping up the banks.  The losers are those who have simply tried to manage their money carefully and invest prudently to get some sort of income.

It is high time the government stepped forward to instruct the regulator to provide restitution for the SEB investors and put in place cast iron guarantees and regulations, so that similar abuses don't occur in the future. The time is well overdue for the government to start looking after investors rather than simply shovelling more and more money toward negligent banks, which continue to profit on the backs of us all.