The Financial Services Compensation Scheme has declared failed mini-bond linked firm Equity For Growth (Securities) Limited (EFG) as in default.
The declaration means that Equity For Growth is not able to pay all outstanding claims against it and the FSCS will now pay successful compensation claims of up to £85,000 per claim.
The FCA said there had been a large number of complaints against the firm which were referred to the Financial Ombudsman Service.
The FSCS, the industry-funded consumer compensation safetynet, told Financial Planning Today that the FSCS has so far received 94 claims relating to general investments provided by the firm, with one upheld triggering the default declaration.
In March the FCA brought a winding-up petition against the firm and the court ordered Equity For Growth (Securities) Limited (EFG) be wound up. The Official Receiver has been appointed to wind up EFG and liquidate any assets.
EFG was a corporate finance firm which had been directly authorised since May 2008. Its activities included the approval of financial promotions for business entities which raised funds by issuing mini bonds.
A number of mini-bond firms have failed in the past 10 years, many of them promising high or guaranteed returns to investors.
EFG was the host firm or principal for five appointed representatives between October 2015 and June 2020. During this period, EFGs business activities were undertaken through its appointed representatives. EFG’s appointed representatives included Osborne Baldwin Ltd, trading as Hunter Jones, (May 2018 to April 2020) and Amyma Limited (July 2018 to September 2019).
The FCA said earlier this year: “EFG had received a large number of complaints from investors, which were referred to the Financial Ombudsman Service. These included claims in relation to mini bonds issued by unauthorised companies and promoted by EFG’s appointed representatives, Amyma Ltd and Hunter Jones.
“We considered that EFG was insolvent and did not have appropriate resources in relation to the Financial Ombudsman claims. This meant it could not pay any compensation consumers may have been owed. We therefore filed a petition on 18 October 2024 for EFG to be wound up so that claims could be assessed by the Financial Services Compensation Scheme (FSCS). The Court has now made a winding-up order. On the same date as the petition, we placed restrictions on the firm to prevent it from conducting regulated activities.’
The FSCS declared EFG in default yesterday (15 July) and said it would continue to assess claims on an individual basis and pay compensation to customers with a valid claim.
EFG appears to have had connections to firms claiming to offer green investments, including renewable energy, 'green' buildings and ‘new coal solutions.’