This ‘risk-free’ investment is a Bridge too far...
A.T. writes: I have been emailed an investment offer of interest of 6.86 to 17.50 per cent, depending on how much I invest and for how long. These rates are from a firm called Certain Bridge, though the email is from a different company. I am not badly off, but not wealthy either, so safety is vital. Is this investment risk-free? CERTAIN Bridge Ltd borrows money from investors, and lends it at a higher interest rate to firms that need a bridging loan to buy property. The loans are secured against the property.
That provides some safety. In addition, your investment would be ‘sliced and diced’ – pooled with cash from other investors, then spread across a number of loans to borrowers. This reduces the risk of a complete failure.
But if you need a risk-free investment then this is not it. What you would actually get for your money is a ‘loan note’ – an IOU from Certain Bridge promising to repay you. Like any IOU, it is only as safe as the person or company that gives it.
Loan notes are not regulated by the Financial Conduct Authority. If anything goes wrong, you cannot complain to the Ombudsman, nor get your cash back from the Financial Services Compensation Scheme. In short, more than 30 years after modern investment regulation began, this is a gaping loophole in the system – as investors with the collapsed London Capital & Finance found to their horror and cost last week.
What is regulated though, is the way loan notes are advertised. The email you received was sent on behalf of sales firm ASP Consulting Partners Ltd. The heading says it is ‘Section 21 approved, authorised and regulated by the FCA, registration number 475953’. But if you think this means the loan notes are in any way approved or regulated, you would be wrong. And if you think ASP Consulting Partners or Certain Bridge are approved or regulated, you would be wrong too. All it means is yet another company decided the advertising was acceptable. That company is called Equity for Growth.
It is genuine, and fully authorised by the FCA. But it was not happy when I told it that because of this connection, Certain Bridge had decorated its website heavily with FCA logos, despite not being authorised itself. It immediately ‘advised’ Certain Bridge to change its website, which it did.
So now for a closer look at Certain Bridge and the marketing firm ASP. These are the initials of Abdool Saleem Peerbux, its boss. His website claims his firm was ‘formed by a select team of London-trained experts in the field of Alternative Assets’. That last phrase is a red flag. It means any scheme that does not require FCA authorisation, leaving investors more or less unprotected.
Company records show Peerbux to be the sole owner and director, so I asked him to name his experts. And I asked him why his website was full of claims about expertise, experience and reliability, yet warned it made no claim to supply accurate, complete or suitable information.
Peerbux reached out to his lawyers – and his website vanished. The lawyers told me the website was ‘undergoing modification/ updating’. Why? Because Peerbux is seeking approval as a representative of an FCA-licensed firm. Ahead of this, they declined to name anyone bar Peerbux himself. They told me his website claims were ‘standard wording’, but would be ‘re-evaluated’.
Of course, Peerbux is just a salesman. The loan notes come from Certain Bridge, led by Gary Hall. He too contacted his lawyers, even objecting to the description of his IOUs as investments. When I pointed out that his own website described people who buy the IOUs as ‘investors’ the website was quickly altered.
Hall said there was no intention to give a false impression by using the FCA logo, but that was deleted too. Other impressive logos belonging to the Solicitors Regulation Authority, the Land Registry, Companies House, and the Information Commissioner’s Office also disappeared.
When I told them of the marketing emails saying ‘earn up to 17.50 per cent’ a year, Hall’s lawyers said ‘our client vehemently denies’ this. But the fact is the emails were issued. Hall told me he had reminded sales agents of what they were allowed to say to drum up business. ‘We take incredible precautions to try and prevent any “rogues”,’ he added.
Let me be clear that, to the best of my knowledge, Certain Bridge has so far paid interest to investors correctly. Hall and his lawyers produced statements from Equity for Growth to confirm this. But this is not the question you posed, which was about risk.
The FCA told me: ‘We do not regulate the issuance of loan notes, though such promotions need to be approved by a firm authorised by the FCA. We urge investors to exercise great caution and not to invest unless they can be absolutely certain of the legitimacy of the investment.’
The bottom line is that no watchdog will help you, and the risks are completely yours. In 21st Century Britain, that is a sad state of affairs for investors.
The FCA has been invited to comment on any application from Peerbux. Watch this space.