Collapsed Unregulated Investment Losses Hit Almost £1 billion In UK
This year has seen an unprecedented amount of unregulated investments collapse, leaving investors at risk of losing huge sums money.
We are barely three quarters of the way through 2019, but it is shaping up to be a year to forget for many investors.
Unregulated investment schemes have been collapsing throughout the year, leaving those who have invested in them – often vulnerable and inexperienced investors – at risk of losing all of their money.
The theme of 2019 began in February when £230m London Capital & Finance entered administration. Many of those affected were first-time investors, individuals who have received inheritance, small business owners, or newly retired. They had been tricked by online adverts promising 8% returns from secure ISAs.
Since then, it has been reported a further nine similar companies have collapsed this year, with three months of 2019 still to go. All of these investments have a parallel theme – they all sourced investment predominately from individual, non-professional investors, none of them were regulated by the Financial Conduct Authority (FCA), and all of them went into administration or another form of shut down.
Here, we can see all of the ten that have been reported, and exactly how much has been lost:
While similar unregulated schemes did collapse in 2018, there were none of the scale of London Capital & Finance, and the combined figure definitely didn’t reach £948m. So is 2019 a particularly unfortunate year, or are we witnessing the beginning of a trend?
We can see that the regularity of the collapses was consistent throughout the year, with two closing their doors in February, two in April, three in May, one in June and two in July.
If the rate of which these investment schemes are going under continues, we could see more losses of investment moving into 2020.
Fraud Reports also on the rise
In addition to the massive potential loss of money from unregulated investments, new data has revealed that investment fraud appears to be on the rise, with 8,000 fraud reports made to the police so far this year.
A Freedom of Information request has shown that 2019 is set for record highs, despite a cold-calling ban which came into force in January. These fraud reports include pension scams.
The investigation revealed police failing to investigate a number of fraud reports, with managers mocking those who had lost massive amounts of money to scammers, calling them “morons”.
Last year there were 9,398 reported scams according to Action Fraud, in which fraudsters would convince families and small investors to put money into high risk and unsuitable investments.
What is being done to help investors?
The institutional failings do not stop there, however. It was reported last year that the Government had financial services in their crosshairs, with the intention of tightening regulations to curb financial mis-selling.
A committee at the time stated its desire to see evidence of how regulators hold financial firms to account for how they treat vulnerable clients.
Nick Smith MP stated –
We have a system of pensions and financial regulations that fails to protect hard-working people. The chancellor needs to put this right and to get on the side of the working people.
We also need stricter penalties, better information and far tighter oversight
However, since late 2018, we have seen an increase in both fraud reports and unregulated investment loses. A somewhat Brexit-focused Government has not introduced tighter regulations in regards to advertising unregulated investments, requiring all UK publicly promoted investment firms to register with the FCA, and/or having those firms provide full and independently audited disclosure regarding their financial position.
If more is not done to protect vulnerable investors from investing their hard-earned cash into unsuitable schemes, we may see higher loses in 2020.
How can Claim Experts help?
Have you been mis-sold an investment? Have you lost thousands of pounds and you are worried you’ll never see it again? We can help you.
Every investment comes with risk, but if you have lost money on a mis-sold investment, we could help you get some of that money back.
If your claim is upheld, you’ll be entitled to compensation. The amount of that compensation can vary greatly depending on your circumstances, but on average we recover £22,000 for successful investment mis-selling claims.
Our legal team come from a financial services and compliance background.We have years of experience in bringing successful claims against pensions and investment providers. We are regulated and authorised by the Solicitors Regulation Authority.
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