The Financial Conduct Authority provides clear guidelines on how complaints should be resolved when made to the firms it regulates. “The firms we authorise must have a process in place for resolving complaints,” according to the FCA. “In general, firms must get back to you in writing to let you know the outcome of your complaint within 8 weeks. They must tell you whether your complaint has been successful or not, or why they need more time to investigate.”

But in relation to multiple complaints made to the FCA itself about failed Manchester-based property company, Blackmore Bond PLC, the authority’s ultimate response time can be measured in years rather than weeks.

The FCA received hundreds of complaints about Blackmore, straddling a five-year period from 2017 to 2022. It was not until February 2025, however, that Alison Russell, Head of the FCA’s Complaints Department Risk & Compliance Oversight Division, wrote to those who had made a range of diverse complaints about the way in which the FCA handled the Blackmore Bonds case.

Blackmore originally made headlines in April 2021 when it entered liquidation after raising several series of mini-bonds that were purchased by bondholders. According to the BBC, around 2,000 bondholders lost a total of £46 million.

The background to this issue starts in the period 2016 to 2018 when Blackmore raised money from investors to fund property developments, offering annual interest payments of up to 10%. By October 2019, Blackmore stopped making payments to bondholders and in April 2020 Blackmore went into administration. In April 2021 Blackmore entered liquidation.

In August 2022, BBC Panorama accused the FCA of failing to act on repeated warnings about Blackmore and claimed that a marketing company had “used suspect tactics to sell mini bonds to ordinary people, not experienced investors.” In January 2023, the FCA admitted that “human error” led to a failure to disclose vital intelligence with the City of London Police about Blackmore.

The regulator made the disclosure in a letter to the Treasury Select Committee. FCA chief executive Nikhil Rathi told the committee: “The FCA shared intelligence in relation to Blackmore Bond Plc with City of London Police as early as 2017, although regrettably human error meant that the full suite of information was not sent across.”

In its 16-page letter sent to complainants in February 2025, the FCA noted that Blackmore was “an unregulated firm that raised funds by issuing mini-bonds”. This was making the point that Blackmore itself was not regulated by the FCA. Instead, two regulated firms, NCM Fund Services (“NCM”) and Northern Provident Investments (“NPI”), approved the financial promotions for the mini-bonds.

According to the FCA’s summary statement, after conducting “thorough enforcement investigations” into NCM and NPI, the FCA decided that the financial promotions were “largely accurate and contained very relevant risk warnings to consumers, so it did not take enforcement action against either firm.”

The statement further noted that bondholders raised “a number of different issues about the FCA’s action surrounding Blackmore – including that the FCA failed to act following warnings about the firm, failed to protect investors and allowed misleading marketing.” Investors asked the FCA to pay compensation and start a criminal investigation into Blackmore.

The FCA, however, did not agree with the investors’ position, concluding that: “The FCA has carefully considered the complaints and decided not to uphold them. The FCA never had any supervisory oversight of Blackmore, handled intelligence received about the firm appropriately and found previously that the financial promotions were largely accurate and contained relevant risk warnings. The FCA will make a payment of between £150 and £250 to each complainant in recognition of how long it took to respond to the complaints.”

The short point is that the FCA admits that the manner in which they had looked at the complaints was unsatisfactory, but that there was, ultimately, no merit in the underlying complaints.

So, do the bondholders have any further possible course of action against the FCA? In practical terms, the answer would ostensibly appear to be no. In terms of appeal mechanisms in relation to the FCA, its decisions are made largely and then largely stand as fait accompli. Although an FCA decision can be appealed, it seems unlikely on the basis put forward by the FCA for the decision that there is much prospect of this being done successfully by the bondholders.

In terms of the Blackmore bondholders being able to recover their investment by pursuing other avenues, the outlook is not promising: post-liquidation, there have been no material recoveries resulting in potential distributions and there is no reason to believe that the position will change. Even if there was a legal avenue which might allow a potential recovery, it seems doubtful that there are any assets against which to enforce.

Inevitably, the FCA’s decision will have come as a blow to the Blackmore bondholders. On any view, the level of FCA compensation that has been awarded, ranging from £150 to £250, is modest. The amounts merely reflect the unusually long period of time that it has taken for the FCA to respond to the complaints raised, rather than its acceptance of any culpability on its part or any failure on the part of a regulated entity.

Given the fact that it was an unregulated entity, it is hard to disagree with the FCA’s conclusion that the agency had no regulatory role which allowed it to supervise Blackmore. Whether this reflects a flaw in the regulatory framework is a matter for Parliament.

The FCA also concludes that the two regulated entities which did approve the mini-bond promotions (NCM and NPI) had produced marketing materials which were sufficiently accurate and contained appropriate risk warnings. These two regulated entities did look at the investments before putting out material that was accurate and included relevant risk warnings, so, the FCA says, there was nothing to raise any regulatory concerns. Taking the conclusion at face value, it is difficult to see that the FCA can be criticised in circumstances where regulated entities have done what was expected of them. Again, if there ought to be righter restrictions on offering documents, that is really a matter for Parliament.

Blackmore also used another company, Amyma, to market and introduce about £600,000 of investment to its mini-bonds. But at the time Amyma made these introductions, it was not regulated by the FCA and as such fell outside of its supervisory regime.

The most striking aspect of the FCA’s letter is that it is notably robust: it is a firm assertion of the principle of caveat emptor – the buyer alone is responsible for checking the quality, suitability, and level of risk, before any decision to purchase is made.

Similarly, in relation to risk, the FCA concludes that where appropriate risk warnings are given on marketing material, it is for sophisticated or HNW investors to make their own decisions about the level of risk involved. The inference for those investors is clear: if an investment sounds too good to be true, then it probably is.

The FCA’s investigation found that Blackmore’s Information Memoranda contained statements disclosing and warning consumers about the risks associated with the investment, including that: “investors’ capital would be at risk and that investors might not get back the money they had invested.”

Although recourse might be available through a traditional breach of contract/misrepresentation claim (which would be very dependent on the precise wording of the relevant documentation), the FCA’s decision appears to suggest that any claim under the Financial Services and Markets Act 2000 will be sowed on very stony ground.

For investors, the FCA’s message is clear: do your own diligence about potential investments and the attendant level of risk before making any decision to commit funds. Even though an investment may be regulated, the hurdles for a regulated entity are not that high. Just because a regulator is involved does not mean there is no risk involved.

Equally, investors who have unexpectedly lost money in an investment will need a legal adviser to look at the relevant contracts and tell them where there are potential breaches. Such breaches may pave way for recovery through the Courts, with the FCA seemingly unwilling to take a particularly interventionist stance.