An adviser has persuaded a retired couple to contact the police and Action Fraud upon hearing they invested their life savings into a mini-bond provider that has gone off-grid.
IFS Wealth & Pensions director and Chartered financial planner Ricky Chan received a phone call out of the blue on 28 October from a Wales-based retired couple. They had accidentally rang Chan when trying to reach unregulated mini-bond provider Exmount Commercial Developments - the phone numbers are nearly identical.
It transpired the couple had invested their life savings with Exmount in 2018, after they were promised between 9.12% and 10.35% annual returns on their investment with three- or five-year bonds. The couple began investing a small amount of money, but over the course of a year took out five mini-bonds with Exmount for a total of £45,000.
The couple were promised their investments would be safe as they were invested in property, and that interest would be paid quarterly. They received a payment in May 2019, but since then have received nothing from the company.
The pair tried to redeem the unregulated bonds in early August 2019. According to Chan, a company representative asked the couple to pay a £606 exit fee. The pair paid, thinking they could get their capital back, but were then told there had been an error, and were asked to send an additional £606.
The couple were sceptical at first, but were assured they would receive a refund of the second exit fee by cheque in the post and their capital at the same time. The couple have not received a refund, nor their capital back, nor had any communication with the firm since.
Action Fraud contacted
The elderly woman Chan spoke with said she believed Exmount were a genuine company because the individual she spoke with "sounded like a nice person" and the company sent "very lovely brochures".
Upon hearing the couple's story, Chan suggested they contact the police and Action Fraud, which they did, and are now in the process of contacting the Financial Conduct Authority (FCA). The couple has also spoken with the Citizens Advice Bureau and their bank's fraud department. The Chartered financial planner is still in conversation with the couple, and is helping guide them on what to do next.
Exmount is registered as Exmount Construction on Companies House and is listed as active. The entry lists six directors, each of whom has resigned, including a Barbara Kahan, who has been listed as a director in 21,689 Companies House entries. The firm's address is listed as Woodberry House, 2 Woodberry Grove, London.
According to its website, Exmount is "an independent property development and regeneration company that focuses on commercial, retail greenfield and brownfield sites to generate value for its stakeholders." Professional Adviser has been unable to contact anyone at the firm.
Trustee company Jade State Wealth briefly worked with the firm in late 2017 to early 2018 as its security trustee. Jade State Wealth said the firm's business model centred on taking pubs and restaurants that were no longer operational and converting them to residential and commercial housing.
Ultimately, Jade State Wealth stopped working with Exmount because it could not pass its due diligence requirements, including providing professional references, a project list and a formal business plan, nor did it contribute capital in the firm's name when asked to do so. When Jade State Wealth stopped working with Exmount it told the firm not to carry out any financial promotions until it secured another security trustee.
PA understands that, after Jade State Wealth, More Group Capital Services acted as the firm's security trustee, but has since stopped working with Exmount. More Group have been contacted for comment.
Jade State Wealth director Graham Arnott told Professional Adviser his firm has been contacted by a handful of investors who were concerned about their investments. Arnott said he and his firm had made efforts to contact those at Exmount, but the phone lines are not working and letters they sent were returned undelivered. Jade State Wealth has reported the firm to the police and Action Fraud.
It is unclear what is going on at Exmount, or what will happen to the investors' money. Issuing mini-bonds is not a regulated activity, meaning firms issuing mini-bonds do not need to be authorised by the FCA.
Mini-bond issuer London Capital & Finance found itself in trouble with the regulator for its financial promotions, which did not comply with the FCA's rules on being fair, clear and not misleading.
Action Fraud has been contacted for comment.
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