Bonds

PMR33 · 17 November 2016 at 4:50PM

I have seen a bond advertised that offers 9.9% pa over 5 years. They operate an insurance scheme to protect up to £75k. Company is Blackmore Investments and they are property developers. It sounds too good to be true! So is it? Does anyone have any experience of this company? They are relatively new so there is little online about them.

PeacefulWaters · 17 November 2016 at 5:00PM

Last one of these I read about forgot to underwrite the insurance.

High risk.

EdGasket · 17 November 2016 at 5:12PM

Why would they bother with paying 9.9% to Joe Public when they can borrow for around 3% from a bank if they are legit?

talexuser · 17 November 2016 at 5:16PM

PMR33 wrote: »

It sounds too good to be true.

You have wisely answered your own question. We regularly have these questions here about one scheme or another. If you cannot lose your money do not touch. If you can lose the money and write it off comfortably, then take the gamble. That level of return compared with other lower mainstream returns has a consequent higher level of risk - possibly losing everything.

Reaper · 17 November 2016 at 5:44PM

It has the traditional hallmarks of a scam. A virtual office address, and a web site created a few months ago. I am sure there would be more alarm bells if I investigated further.

jimjames · 17 November 2016 at 6:00PM

PMR33 wrote: »

I have seen a bond advertised that offers 9.9% pa over 5 years. They operate an insurance scheme to protect up to £75k. Company is Blackmore Investments and they are property developers. It sounds too good to be true! So is it? Does anyone have any experience of this company? They are relatively new so there is little online about them.

Are you happy to lose all your money? That is a possible outcome as it is not protected.

Reaper · 17 November 2016 at 6:11PM

There is an online chat facility on their web site so I thought I would give it a go...

Thanks for visiting our website. If you have any questions, please just ask as our account managers will be only too happy to help.

Your web site says "It is important that this website is read in conjunction with the full Information Memorandum relating to this investment". Where can I download that?

Hello. You are speaking with David Draper and I am an account manager here. Could I take a note of your full name please so I know how to address you?
Tom Osbourne (made up of course)

Good afternoon Mr Osbourne. You can read the Information Memorandum as part of the online application process. It is available after you answer a few questions that will classify you as an investor. We need to ask these to be compliant with Section 21 of the Financial Services and Markets Act 2000.You do not have to actually submit the application once you have read the IM if you do not want too.

I see your office is in Brighton. I may visit there soon, could I come in and discuss investing? (A trick question as I already know it's a virtual office.)

Yes, that is correct. We don't have a customer facing office as we are an online company. We do however have the facility to arrange meetings with our senior management team in certain situations.Could I enquire as to how much you were thinking of investing Mr Osbourne?

I just looked up section 21 of the Act. It doesn't say much, just "21. It just gives the definition of “relevant insurance activity”. Are you sure you quoted the right bit? (My cut and paste went a bit wrong but basically section 21 doesn't say anything.) http://www.legislation.gov.uk/uksi/2005/1529/pdfs/uksi_20051529_en.pdf
EDIT: see my next post about section 21

Section 21 is in regards to restrictions on financial promotions. Ours have been signed off as compliant by NCM Fund Services who are an FCA regulated company.Would you like me to give you a call Mr Osbourne as sometimes this is easier than discussing detail on this Live Chat?

No, as I'm pretty sure this is a scam. I would have liked to see that sign off but it appears to be only available to those who have applied.

No. It is available at an advanced stage of application before any commitment has been made.

. . . . .

I stopped there. I feel I gave them a fair chance to defend themselves. I wouldn't touch them with a bargepole but make your own minds up.

dunstonh · 17 November 2016 at 6:13PM

This is not a savings bond. It is an unregulated high risk investment with 100% loss potential and no FSCS protection.

These types of investments should not be aimed at your typical retail customer.

The company is not regulated and should not be targeting UK retail customers.
The company address is rented office space which includes day office and virtual office.
The company was only incorporated on 12th July 2016 and has filed no accounts

When unregulated companies use the word guarantee you should not treat it the same way regulated companies mean it. The FCA require firms using guarantees to actually have the cash and liquid assets to cover it. When unregulated companies use the word guarantee you can still lose everything as its is only as good as the company providing it. If the company providing it fails, the money is lost. Remember lehman brothers? they used to cover a number of guaranteed products with no FSCS protection. That guarantee turned out to be useless.

These types of bonds are not necessarily bad or wrong. Many are genuine issues designed to fund a company. This could well be one of those. However, they are not meant to be "sold" to retail customers or marketed to retail customers in the same way you would see regulated retail financial products.

How did you manage to hear about them?

Reaper · 17 November 2016 at 6:16PM

I may have been unfair about section 21. Perhaps the sections are not laid out as I thought since I found this elsewhere:

The Financial Services Market Act 2000

Section 21 of FSMA sets out the general restriction on financial promotions and can be summarised as follows (the “Financial Promotion Restriction”):

A person must not in the course of business communicate an invitation to engage in investment activity unless he is an authorised person, or the content of the communication has been approved by an authorised person, or the communication is covered by an exemption.”

If a person who is not an authorised person (i.e. authorised by the FCA) communicates, or causes someone else to communicate, a financial promotion, in breach of the Financial Promotion Restriction, they will be:

committing a criminal offence unless an authorised person has approved the content of the financial promotion or it is covered by an exemption,
liable for a fine, up to two years’ imprisonment, or both.
Any agreements entered into as a result of the communication may also be unenforceable: the customer may be entitled to recover any money paid or other property transferred under the agreement and compensation for any loss.

But I'm still not sure what that has got to do with not letting me see the sign off from the FCA registered firm until I apply.

BananaRepublic · 17 November 2016 at 8:01PM

Reaper wrote: »

I may have been unfair about section 21. Perhaps the sections are not laid out as I thought since I found this elsewhere:

The Financial Services Market Act 2000

Section 21 of FSMA sets out the general restriction on financial promotions and can be summarised as follows (the “Financial Promotion Restriction”):

But I'm still not sure what that has got to do with not letting me see the sign off from the FCA registered firm until I apply.

I'm stating the really rather obvious, but the aim is (presumably) to assure you that they are compliant, but avoid actually proving that they are, so they can get you on the phone. That then allows them to do a hard sell, and smooth talk you, and with luck you will then forget all about compliance, and documents and sign away your life savings. Well, it is nearly Christmas, and a Porsche does not buy itself.

DrSyn · 17 November 2016 at 10:38PM

PMR33 wrote: »

I have seen a bond advertised that offers 9.9% pa over 5 years. They operate an insurance scheme to protect up to £75k. Company is Blackmore Investments and they are property developers. It sounds too good to be true! So is it? Does anyone have any experience of this company? They are relatively new so there is little online about them.

Stop and think!

1. Low Risk
Best 5 year fixed rate savings account thats covered by the FSCS compensation scheme is about 2%.
http://www.thisismoney.co.uk/money/article-1621507/Best-savings-rates-Fixed-rate-accounts.html

2. A risk investment.
The FTSE 100 dividend yields about 4%.
http://www.hl.co.uk/shares/shares-search-results/v/vanguard-funds-plc-ftse-100-ucits-etf-gbp

3. High risk
If anything is giving 9.9% (over twice the FTSE), it must be high risk.

You do not need to know anything about the company to work that out.

4. Suggestion " If it sound to good to be true, let someone else have it."

Bonds

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