Savers lured by 8.25 pc bond could now lose every penny

AROUND 850 British savers who invested £8.15 million in a bond promising sky-high returns may have lost every penny.

The so-called mini bonds advertised a tempting interest rate of up to 8.25 pc a year.

Many savers signed up for the more risky investment in an attempt to find a decent return for their nest-egg.

However last week, the issuer of the investment, Providence Bonds, was wound up by an order of the Royal Court of Guernsey.

In addition, companies connected to Providence Bonds were put into receivership by watchdogs in the U.S. last month.

Savers, who invested an average of £10,000 each in the bonds, may not be able to get their money back. Ordinarily, if an investment firm goes bust, you can claim up to £50,000 under the Financial Services Compensation Scheme. Mini bonds, however, are not eligible for compensation.

They also cannot be traded on the stock market.

This means savers will get money back only if the administrator winding up the firm, Deloitte, can recover any cash.

A Deloitte spokesman said: ‘ We are continuing our investigations and will be reporting to creditors in due course.

‘We are also co-operating with a number of regulatory and other agencies around the world.’