Tuesday, 13 September 2016
Providence bonds collapse, just 18 months after Secured Energy Bonds raises the question as to how many more investors must lose their money before the regulator will act on mini-bonds?
Providence bonds have become the latest mini-bond product to collapse, potentially leaving some 800 investors cumulatively £8 million out of pocket.
Sound familiar, well 18 months ago, some 900 investors in the Secured Energy Plc minibonds learned the news that that company had gone into administration, costing them a potential £7.5 million.
There are a number of parallels between these two financial disasters – i) many investors have holdings in both SEB and Providence Bonds, so have been hit twice over.
ii) Independent Portfolio Managers were playing the role of security trustee on both bonds, supposedly looking after investor interests.
There are a lot of angry investors out there wondering why regulators have just sat by, letting their money disappear into these faulty investment vehicles.
Some wonder where it is all going to end, with savers being forced toward ever riskier products to try to secure a return.
My own gripe with the Providence Bond was with IPM, which last year contacted me promoting the second Providence Bond paying 7.5% over four years. Thankfully I did not invest.
I complained to IPM about being contacted and later raised the issue in my complaint to the Financial Ombudsman.
Surely, something has to happen to remedy this situation, there are now 100s of people out of pocket courtesy of these bogus mini-bonds. How can the regulator just sit there and let it happen. Will they adopt the same approach to the Providence bond holders, as SEB – many of whom are caught up in both mini-bonds? It must be time for those in government and the regulatory authorities to act, not just sit on their hands, letting unscrupulous people relieve growing numbers of people of their hard earned savings.
see - https://www.theguardian.com/money/2016/sep/07/investors-risk-losing-8m-in-failed-mini-bonds