Consumer warning on Northern Provident Investments

We are notifying NPI customers of its proposed liquidation and warning them of the danger of scammers contacting them. As part of this we are setting out the steps customers should take if contacted by people claiming to be from NPI or FRP.

NPI operated a platform where retail customers could buy debentures and shares, which may be held in an Innovative Finance Individual Savings Account (IFISA) or Stocks and Shares Individual Savings Account (SSISA). Some of these investments were mini-bonds.

NPI previously approved financial promotions for issuers of mini-bonds. In February 2020, following the firm’s application to the FCA, we imposed requirements on NPI for it to cease approving any further financial promotions. As part of these requirements NPI placed a statement on its website that it would no longer be offering this service. These requirements were previously confidential between us and NPI.

On 6 August 2021, the sole director and owner of NPI decided to take steps to wind up NPI.

All known creditors were contacted on 6 August 2021 with the formal notification of the process. It is proposed that licensed insolvency practitioners from FRP will act as joint liquidators on 20 August 2021.

Be alert to scams

All customers should remain alert to the possibility of fraud. Given the large number of mini bonds that NPI distributed via their platform, we believe there is a high risk of scammers trying to take advantage of NPI’s liquidation to try to defraud customers.

Fraudsters sometimes claim to be from legitimate firms authorised by us, or (in the case of liquidation) their appointed liquidator. This is what we call a ‘clone firm’. We have seen previous examples of fraudsters posing as authorised firms and asking customers for money in return for the money they’d invested through them.

If you give money to a clone or unauthorised firm, you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

Protecting yourself

If you are cold called by someone claiming to be from NPI or FRP please end the call and contact NPI or the proposed Joint Liquidators after they are appointed using the details published on the Financial Services Register.

You should access the FS Register directly from https://register.fca.org.uk/s/ rather than through links in emails.

We recommend customers review the information on our website, through ScamSmart, to help protect people from scams, including from clone firms and individuals.

Why did the Director of NPI apply to place the firm into Liquidation?

NPI has received insolvency advice and has decided to take steps to place NPI into liquidation.

Where can I find more information and how will it impact me?

Customers should check the documentation they have available (for example the client agreement, terms of business) to understand what services they received from NPI. For example, whether their investment was arranged by NPI and whether NPI acts as the ISA manager for their investment.

Customers can find more information about how they may be affected via NPI’s website.

NPI arranged an investment into a mini-bond for me, have I lost my money?

NPI facilitated investments into mini-bonds by accepting funds and transferring these funds to a bond issuer.

They did not hold customer investments themselves.

Your investment continues as before and is not affected by NPI entering liquidation.

Whether you get the money you invested in a mini-bond back and any return on that investment continues to depend on the performance of the firm that issued your investment (eg mini-bond issuer). This is unaffected by events at NPI.

I paid my money to NPI to invest in a mini-bond recently, is that still being held by NPI?

NPI are currently holding a small amount of client money, which is held in a segregated client account. The firm has contacted all impacted clients to arrange for the money to be returned. Should any client money remain once NPI enters liquidation, this will be dealt with by the liquidators.

Please see more information on NPI’s web page.

What should I do if I have an ongoing case at the Financial Ombudsman Service against NPI?

Please contact the Financial Ombudsman Service via its website or by calling its helpline on 0800 023 4567.

I have invested in an ISA / innovative finance ISA (IFISA), is it valid?

NPI entering creditors’ voluntary liquidation will not in itself affect the validity of ISAs managed by NPI. NPI is still an approved ISA manager. Qualifying investments held within an ISA wrapper in accordance with the ISA Regulations will continue to be within an ISA wrapper.

If this changes for any reason, ISA investors will be notified by the proposed Joint Liquidators.

Will the FCA be overseeing the liquidation?

We do not directly licence or oversee insolvency practitioners.

The proposed Joint Liquidators are officers of the Court and will need to comply with all relevant insolvency law. The individuals proposed to be appointed are authorised to act as licensed insolvency practitioners by the Institute of Chartered Accountants in England & Wales (ICAEW) and the Insolvency Practitioners Association. We are liaising closely with the proposed Joint Liquidators.

NPI is still authorised by the FCA and its permissions will be retained during the insolvency process, where necessary, to enable the proposed Joint Liquidators to help ensure an orderly wind down.

What is the FSCS and will they cover any losses and/or redress claims?

The Financial Services Compensation Scheme (FSCS) protects consumers when financial services firms fail. It is the compensation scheme for customers of UK authorised financial services firms. If a firm fails and owes you money, you may be able to claim compensation from the FSCS, depending on the firm and type of activity it does.

The Joint Liquidators, once formally appointed, will work with the FSCS to determine the position and will provide further updates.

The FSCS is operationally independent of the FCA and it is the FSCS that determines whether compensation is payable under the FCA’s compensation rules. Consumers can find further information on the FSCS website.

What is a mini-bond?

There is no legal definition of a ‘mini-bond’, but the term usually refers to illiquid debt securities marketed to retail investors.

A mini-bond is essentially an IOU issued by a company (the issuer) to an investor, in exchange for a fixed rate of interest over a set investment term. At the end of the term the investors’ capital is due to be repaid.

The return on investors’ money depends on the success and proper running of the issuer’s business. If the business fails, investors may get nothing back.

For more information, please see our page on mini-bonds.

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