The
investors had complained about Independent Portfolio Managers (IPM) role in promoting
and arranging investments in the £7.37 million Secured Energy Bond
(SEB).
After struggling
with the FO for nearly three years, SEB investors have been told that two of
their complaints have been upheld. It is expected that those in similar
circumstances are also likely to have their complaints upheld, as FO have
described these two complaints as “sample cases”.
The
Secured Energy Bond was launched back in 2013, with IPM appointed to look out
for the interests of the 973 investors, who put £7.37 million into the product for
three years at a promised rate of 6.5%.
IPM had three roles:
IPM had three roles:
*the approver of the Invitation
Document,
*Security Trustee
*Corporate Director. (cf.
attached background collapse of SEB Bonds for details)
The bonds were intended to fund solar panel installations on 22
schools across the country.
The problems arose, when a large amount of the funds intended to
provide solar panels, was instead siphoned off by the Australian parent company
CBD Energy for other purposes.
SEB went into administration early in 2015 and its
parent CBD Energy had been placed into administration in 2014. Blue Energy plc
took over some of CBD Energy’s assets but not their liabilities, thereby
cutting off all SEB claims.
The first that investors’ became aware of the problems was at the end of January 2015 when an interest payment was not made.
The first that investors’ became aware of the problems was at the end of January 2015 when an interest payment was not made.
The FO
ruled that IPM’s involvement was not only approving the promotion documents but
that IPM ‘had an ongoing role in the investment scheme’ and was ‘central to the
security and quality assurance arrangements’ of SEB.
Notably,
the FO has restricted its ruling to issues around the bond at launch, which
portrayed the product as safe and secure, and not the subsequent role of IPM,
when SEB went bust.
The FO
ruled that the security that was put in place for the mini-bond was flawed,
“leaving the security secured, in effect, on nothing. This was a fundamental
flaw and one which IPM should reasonably have spotted.“
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 100s of MPs.
The final
decision, follows a roller coaster ride, with investors directed by the FCA to
the FO. At first, the FO 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, with the assistance of FS
Legal, to support their complaints. This resulted in FO ruling that they had jurisdiction
to consider complaints in January 2017. This decision has now been finalised
and complaints upheld against IPM on the grounds of both jurisdiction and merits.
FO should
treat all SEB complaints of a similar nature the same. It is estimated that
only just over 500 of 937 investors have complained to FO. All investors now
have a good chance of getting most of their money back through FO.
It has been a long battle
but worth it in the end. Investors would like to thank the FOS for their
painstaking and thorough approach to the case. Also, the many MPs who offered
support.
This
ruling is also testament to what can be achieved when people come together to
demand justice. Without the formation of the SEB Investors Action Group, none
of this would have been achieved. Most media and commentators wrote off any
chance of investors seeing a penny back. It was only the determined efforts of
a relatively small number over three years that has led to the result we see
today. It is a real result for people power.
*see Telegraph - "Failed mini-bond investors win case against regulated firm that helped sell them" - https://www.telegraph.co.uk/investing/bonds/failed-mini-bond-investors-win-case-against-regulated-firm-helped/This is money - "Victory for investors three years after £7.5 m mini-bond collapse, as Ombudsman upholds complaints against Secured Energy Bonds firm" - see:www.thisismoney.co.uk/money/investing/article-5917139/SEB-mini-bond:investors-victory-three-years-7.5m:collapse.html
Thanks for providing this summary of the whole saga. I have been involved from the start and the memory of what happened along the way has dimmed with time. I think you are right about the formation of the IAG being crucial and the obtaining of legal muscle also helped to persuade the FOS to continue with the case. We still need to get our money back and this will probably need the involvement of the FSCS.
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