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FCA Decision on Blackmore Mini-Bonds Sparks Questions on Investor Behaviour and Regulatory Oversight

Journalist: Scott Gallacher, Newspage Newsdesk

ended 07. December 2023

The Financial Conduct Authority (FCA) has opted not to take action on the promotion of Blackmore mini-bonds. Following a comprehensive review of over 8,000 documents and 7,000 hours of analysis, the FCA concluded that the financial promotions were largely accurate and included relevant risk warnings.

Despite the disclosed risks and costs of up to 20%, consumers invested tens of millions in this high-risk venture, prompting crucial questions about investor decision-making.

We seek your insights on:

  1. The motivations behind such investments and whether this indicates a tendency for consumers to overlook risk warnings.
  2. In light of investors seemingly overlooking risk warnings, should the FCA consider regulating these products and potentially restricting them to 'advised only' sales to better safeguard investors?
  3. Does this situation serve as 'proof' that investors should be considering professional financial advice?

2 responses from the Newspage community

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Editor
Scott Gallacher
Director at Rowley Turton
Investors chasing high yields with Blackmore may have overlooked risks, exposing a broader issue of overconfidence in financial decision-making. Sadly, the undervaluing of professional advice persists. Qualified advisers should assess risks effectively. While it's unlikely a competent adviser recommended Blackmore, if so, the client gains consumer protection and complaint grounds. Consideration of regulating sales to 'advised only' strikes a balance between protecting investors and maintaining choice.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
People always have and always will get sucked in by the promise of high returns. Financial risk warnings get ignored much like we just accept the terms on a website, or when our bank asks us if a payment is genuine. That does not mean that the risks warnings should not be included. It means that there needs to be a better understanding that if something looks to good to be true, it probably is. Creating and maintaining wealth for you and your family for the long term is normally not exciting: it just takes patience and discipline.