Thursday, 27 April 2017

Good news for investors as Financial Ombudsman confirms it will adjudicate on Secured Energy Bonds

Good news for investors in the defunct Secured Energy Bonds, with the Financial Ombudsman’s Service (FOS) confirming that it has jurisdiction to look at Secured Energy Bonds (SEB), and the role of Independent Portfolio Managers (IPM).

The FOS confirmed that “IPM’s conduct did amount to the regulated activity of arranging deals in investments” and “there’s a customer-firm investment relationship between investors and IPM.”

IPM were appointed the Security Trustee to look out for the interests of the 973 investors, who put £7.37 million into Secured Energy Bonds. The bonds were intended to fund solar panel installations on 22 schools across the country. The investors return was to be 6.5% over three years.

The problems arose, when a large amount of the funds intended to provide solar panels on 22 school buildings was instead siphoned off by the Australian parent company CBD Energy for other purposes. CBD Energy went into administration in November 2014.

The first investors knew of the problems came at the end of January 2015 when an interest payment was not made. SEB went into administration early in 2015.

The investors formed a campaign group, the SEB Investors Action Group, which has been raising the case with the FCA, the FOS, the Treasury, Treasury Select Committee and well over a hundred MPs.

The latest ruling, follows some flip flopping by the FOS, which at first indicated it could look at the investors case against IPM, then produced an opposite view. Investors then felt compelled to obtain a barrister’s opinion to assist their complaints after the negative adjudication from FOS.
The latest decision is to be welcomed, as it has positive implications for SEB and possibly other mini-bond investors. It must be hoped that the decision means that those putting promotional literature into the media promoting such products will now be held more directly responsible for their actions.

The position before this decision amounted to companies being able to promote products under the aegis of their being FCA approved to the general public, without having to accept any responsibility. Now, it seems that the obligations that come with such a role will be upheld – this is good news for investors.  

* Investors who have not previously been in touch with the Investors Action Group are invited to contact:

Note: Chair of the Treasury Committee, Andrew Tyrie is standing down at the election, so there will be a new chair come the new Parliament.

- see also

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