Northern Provident Investments entered voluntary liquidation in August 2021 leaving investors facing uncertainty and financial loss. City watchdog, the Financial Conduct Authority has issued a warning about the possibility of scammers taking advantage.
Northern Provident Investments (NPI) previously operated an online platform where investors could buy a range of products including debentures, shares and mini-bonds.
What are mini-bonds?
Mini-bonds are often advertised as a higher return investment, but with higher returns often come higher risks. You invest an amount of money in a company (similar to a crowdfunding initiative), with a promise of a particular rate of interest to be paid after a certain period of time. At the end of the term, you expect to get your initial investment back, as well as the interest. However, some businesses fail and are unable to pay the interest or return the initial capital – and worse, mini-bonds are not protected by the Government backed lifeboat service, the Financial Services Compensation Scheme (FSCS), meaning that it is unlikely that investors will be able to claim compensation for their losses.
Innovative Finance ISAs
+ −NPI also acted as a manager for Innovative Finance Individual Savings Accounts (ISA), a way of allowing investors to save into different bonds, within a tax-free wrapper. The investments approved by NPI were often of higher risk than advertised and were offered alongside more conventional Stocks and Shares ISAs to entice investors.
Where do NPI investors turn to for help?
+ −When NPI entered into liquidation last year, management of the mini-bonds associated with it was handed back to the businesses that received people’s investments. Investments would have continued as normal, as NPI did not hold investors’ money themselves.
However, some investors have discovered that their money has not been repaid on time and have sought resolution directly with the bond issuer. Whether or not they are successful will depend on how easy it is for the company to raise funds, for example, by selling property or assets.
FSCS investigation
+ −NPI has not been declared in default, as yet. However, the FSCS, a body set up to compensate victims of failed FCA-regulated financial firms, issued an update in April this year, saying:
“FSCS is aware that certain investments have failed. We’re also aware that some customers paid money to NPI to invest on their behalf and that money has not yet been invested.
“FSCS is in the early stages of investigating whether there are any claims against NPI that meet the qualifying conditions for compensation. As part of this investigation, we will work closely with the Joint Liquidators once they are appointed.”
They will issue more updates on the progress of their investigation in due course.
Risk of Investors being scammed
+ −The Financial Conduct Authority (FCA) has urged investors to be vigilant:
“Fraudsters sometimes claim to be from legitimate firms authorised by us, or (in the case of liquidation) their appointed liquidator.
“This is what we call a ‘clone firm’. We have seen previous examples of fraudsters posing as authorised firms and asking customers for money in return for the money they’d invested through them.”
Jason Baker and Geoff Rowley of FRP Advisory Trading Limited (FRP) have been appointed as joint liquidators.
Which funds were associated with NPI?
+ −- Barbican Investments
- Azurite ISA
- Blackmore Bond
- Fluid Trust ISA
- Absolute ISA
- Acorn ISA Bond
- Choices ISA
- Convivia Capital’s Convivia ISA
- FREE Wind ISA
- Knightsbridge Capital Bond
- Northbridge ISA
- Ziphouse IFISA
- Access Commercial bonds
- Astute Capital’s IFISA
- Satchi Holdings’ ISA-eligible bond
- Haletone/Shetland Space Centre IFISA-eligible bond
- Synthesis Analytics UK IFISA-eligible bond
- Summit Resorts & Development Ltd IFISA-eligible bond
- The Electric Vehicle Company IFISA-eligible bond
- Leonne International IFISA-eligible bond
Avoiding clone firm scams
+ −If you are cold called by someone claiming to be from NPI, FRP or one of the companies named above, the advice is to end the call and contact FRP Advisory directly. We have recently reported on the growing use of clone firms by scammers to con victims – it is vital that investors remain vigilant.
TLW Solicitors' point of view
+ −Sarah Spruce, head of Professional Negligence at TLW Solicitors said:
“The collapse of Northern Provident Investments has left investors confused about where to turn to for help. We will have to wait and see if the FSCS investigation yields any evidence of financial mis-selling by the firm.
“In addition, the FCA’s warning about clone firm scams serves as a reminder for us all to be especially vigilant. Victims of such fraud often feel embarrassed to ask for help, thinking they should have known better. Do get in touch with a member of the TLW team to discuss your options – it may be possible to claim back what you have lost.”
TLW Solicitors can help – fraud and scam compensation specialists
+ −As well as being able to investigate any potential claim in relation to losses caused by NPI’s liquidation, TLW Solicitors also has a specialist Fraud and Scam team to help recover compensation for anyone who may have been a victim of a clone firm scam. Working on a ‘no win, no fee’ basis, we understand the claims process and the technical information that needs to be gathered.
If you, a friend or a loved one has been conned into making payments to a clone firm or bank, then please get in touch with our specialist team for a confidential, no-obligation discussion. You can call us on 0800 169 5925 or complete the Online Claim or Callback forms below.
Time limits can apply and so anyone wishing to bring a claim should do so without delay.
Meet Our Team
Meet Sarah, who heads up our experienced Fraud and Scam Claims team.
Sarah and her colleagues are on hand to help with your claim.
“FSCS is aware that certain investments have failed. We’re also aware that some customers paid money to NPI to invest on their behalf and that money has not yet been invested.”
Financial Services Compensation Scheme
