Some 973 people who invested between £1,000 and £100,000 in a dodgy £7.5m green fund will find out on 1 April whether they've lost all their money. The accountancy firm Grant Thornton will hold a creditors' meeting on that date for those who invested in Secured Energy Bonds in 2013, when they were promised 6.5 per cent annual returns that were claimed to be "protected, stable and socially responsible".
It turned out they weren't protected or, indeed, stable – and that, in a tale I reported in January, UK investors seem to have fallen victim to some Australian sales people who simply couldn't deliver on their attractive promises.
Paul Donovan is one of the investors hit by the collapse of the fund and is understandably fuming. "Investing in sustainable energy bonds is a highly risky savings strategy, the market is unregulated, the Financial Conduct Authority [FCA] takes no responsibility for anything that happens there, and investors should be fully prepared to lose all their capital. That is the sort of warning that should have been carried on Secured Energy Bonds when they were launched," he says today.
"I was attracted by the returns but also by the fact that the money would be used for the good of the environment, specifically to put solar panels on UK schools."
All went well for the first months of the bond, Paul reports. Interest was paid on time and there was even an "early bird" payment for those who got in early.
"This all changed in January, when the fourth interest payment was not made. The hazard warning lights came on. There was no response to emails sent to the company, and the phone line was dead. A call to [the outsourcing company] Capita, which dealt with the interest payments, confirmed that interest payments had been suspended."
It turned out that the Australian parent company, CBD Energy, had gone into administration. But as the UK-incorporated Secured Energy Bonds was separate, Paul – probably like other investors – assumed his money was protected.
He got a shock. "I contacted the FCA, which effectively said 'nothing to do with us, mate – try the trustee'." That was Independent Portfolio Managers, which were charged with overseeing investors' interests. I spoke to IPM in January and it promised it was trying to sort things out. It seems to have failed, and with administrators in – and running up their own bill – there doesn't seem a lot of hope for investors.
"The FCA should also be asking questions, as IPM was supposed to be its representative on the trustees, ensuring investors' interests were protected," says Paul. "The simple shrug of the shoulders approach really will not suffice."
I agree. While investors should understand that there are risks, the UK business was supposed to have been ring-fenced from any problems that may have developed at its Australian owner. They appear to have been let down by all those they rely on to protect them, not least the City watchdog. The investors will find out their fate on 1 April. I hope that they don't turn out to have been April fools.
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