‘Why didn’t the regulator keep us safe?’

City watchdog was warned three years before Blackmore collapsed – owing small bondholders £47m, reveals Adam Williams

Cross-party MPs have demanded an independent inquiry into how the City watchdog failed to prevent the collapse of investment firm Blackmore, which cost investors £47m.

Telegraph Money can reveal £29m of that sum was invested after the Financial Conduct Authority was alerted to issues with the risky property “mini-bonds”.

Blackmore fell into administration in April 2020 and the 2,200 bondholders fear they will lose 100pc of their investment in circumstances that are eerily similar to the failure of London Capital & Finance, another mini-bond provider that collapsed owing millions.

An independent review into the FCA’s conduct, headed by retired judge Dame Elizabeth Gloster, found it repeatedly failed to intervene at LCF. Now campaigners want a similar investigation into the FCA’s role in the Blackmore collapse.

Conservative MP Kevin Hollinrake said there had been a succession of failures at the regulator. “Multiple, significant, credible concerns had been raised with the regulator well before the firm’s failure,” he said. “It is time for a thorough and fully independent review.”

Labour’s Cat Smith, the shadow cabinet office minister, said she had “written to the Treasury urging an investigation into negligence on the part of the FCA”, while Sarah Olney MP, Liberal Democrat business spokesman, added: “We are seeing a clear pattern of behaviour from the FCA. It shies away from regulatory scrutiny and consistently puts savers at risk.”

In the House of Lords, Baroness Bennett of the Greens and Lib Dem Lord

Sharkey also backed calls for a review. One of the regulator’s defences in the LCF case was that reports to the FCA’s call centre from whistleblowers were not passed on to senior figures to investigate. However, in the Blackmore case high-ranking officials at the regulator were made aware of major issues years before the firm’s eventual demise.

Correspondence seen by this newspaper showed a manager in the FCA’s whistleblowing team, John Dodd, was warned by financial campaigner Paul Carlier in March 2017 that Blackmore was acting unlawfully. Mr Dodd told Mr Carlier the issue had been passed on to the relevant department. Only £18m had been taken from investors at that stage, Telegraph Money can disclose.

In August 2018 a further email was sent to Andrew Bailey, the FCA chief executive, now Governor of the Bank of England, and other senior staff including enforcement director Mark Steward. Mr Steward replied saying the issue was being looked into, but the firm continued trading until its collapse in April 2020. An intervention could have prevented investors from losing their cash. Retiree Charlie Griffiths, 77, invested £20,000 into Blackmore in January 2019 and now faces losing his entire investment. He blamed the regulator for not intervening. “We have been let down by the FCA,” he said.

In his warning letters, Mr Carlier had told regulators that pensioners like Mr Griffiths were being targeted by sales staff working on behalf of Blackmore. Financial rules mean any customers investing in mini- bonds must be wealthy or sophisticated. However, Mr

Griffiths believes he was coached into declaring himself suitable, given he had no experience of high-risk investing.

Blackmore was an unregulated firm but the FCA has the power to intervene if illegal or fraudulent activity is taking place. Like LCF, Blackmore used regulated marketing firms to promote bonds to consumers, but LCF’s £236m collapse in January 2019 did not trigger an intervention in the Blackmore case. Even today Blackmore does not appear on the regulator’s warning list.

An FCA spokesman said firms that had approved Blackmore promotions were no longer able to do so. It added: “Neither Blackmore nor the mini-bonds they sold are regulated by the FCA.”

HM Treasury, which commissioned the Gloster review, declined to comment on any review into Blackmore.