The tax-free bond that really is too good to be true...
Probes a world of scams and scandals
M.A. writes: I was looking to put £20,000 into an investment bond and gave my details to a website. I received a brochure and a sales call from Redcap Management offering a bond issued by Standard Chartered Bank. The paperwork has the bank’s logo and says the investment is protected by the Financial Services Compensation Scheme. But I contacted Standard Chartered and was told this appears to be a scam. YOU were right to be suspicious, – this is a scam. Redcap Management claims to offer a Standard Chartered Special Issue Bank Bond with a one-year yield of 6 per cent, or 10 per cent if you invest for three years.
This is all supposedly asset backed, protected by the Financial Services Compensation Scheme, and tax exempt.
Well, who could not resist such a package? Anyone with an ounce of sense is the answer.
Redcap Management has a London telephone number – 0203 411 6711 – but where it rings is anyone’s guess. It also has a Swiss telephone number and gives its address as Paradeplatz 8 in Zurich. If it is there, perhaps it is hiding in a basement cupboard. This is actually the world headquarters of Credit Suisse.
According to its website, Red- cap Management is ‘authorised by the Swiss Financial Market Supervisory Authority (FINMA)’. This means Redcap is ‘permitted to offer the services of an asset management company in 27 countries of the European Union’.
Oddly though, Redcap does not appear on FINMA’s public register of approved financial sector businesses. The Swiss watchdog told me: ‘The company has no authorisation for any activities in the financial market requiring an authorisation in Switzerland.’
So is Redcap simply marketing Standard Chartered bonds without proper authorisation? Or do the bonds not exist?
When I let the bank know what was on offer from Redcap, it was crystal clear in describing this as a fraud. Officials told me: ‘We are aware of the existence of f ake bond scams and have reported cases of which we are aware to the Financial Conduct Authority.’ Anyone considering any investment should consult an independent financial adviser, they added.
What the UK regulator has done with this information is anyone’s guess. Probably nothing. There is not even a warning on its website about Redcap Management operating fraudulently and without authorisation, let alone a mention of fake Standard Chartered bonds being marketed.
It would have been nice to discuss all this with Redcap itself, of course. I called its London number during normal business hours but after ringing out for an unusually long time my call went to an answering service.
I left a detailed message and followed this up with an email offering to drop in at Redcap’s London office i f I could be given the address. Answer came there none.