What happened to Basset & Gold?

A significant proportion of the funds B&G plc raised by issuing its bonds was invested in the high cost short term credit lender, Uncle Buck Finance LLP (Uncle Buck), which entered into administration on 27 March 2020.

Basset & Gold entered administration in April 2020, not long after Uncle Buck.

B&G plc and B&G Finance took independent solvency advice after the FCA raised concerns about the viability of the B&G mini bond scheme because the money raised from the mini bonds was almost entirely invested in Uncle Buck.

Many investors say Basset & Gold told them it was investing in many small businesses when in fact it was putting all their money into subprime loans through the high interest payday lender.  Administrators also say that 20% of Basset & Gold bondholders’ investments in Uncle Buck were paid in fees to companies controlled by Hadar Swersky, the Israeli businessman who was the founder of Basset & Gold.

Basset & Gold and Gallium Fund Solutions Ltd

Around £13 million of Basset & Gold’s bonds were sold when the firm was the authorised representative of Gallium Fund Solutions. Gallium specialises in the creation and operation of unregulated collective investment schemes (“UCIS”). Essentially, they provide a package of regulated activities to enable their clients to proceed with the launch and operation of their UCIS.

Gallium promoted Basset and Gold Mini bonds and between February 2017 and March 2018 while Basset and Gold were an appointed representative.

Gallium have so far refused payment and denies liability for the sale.

This is not the first time that Gallium have been caught out. The company is also facing compensation demands through the ombudsman from British Steel Pension holders who blame it for their being switched out of their defined benefit pensions and into poorly performing schemes.

A further £21 million of the bonds were sold in the last two years of trading when the Financial Conduct Authority granted a direct licence to Basset & Gold’s B&G Finance division.

However, whilst Basset & Gold were regulated the mini-bonds it issued throughout its five-year lifespan were not. Through a linked company, B&G Finance Ltd, they were able to provide unsolicited and negligent advice to “help clients find a safe home for their savings.”

What can be done and how can APJ help?

The administrators, Harrisons Business Recovery, and Insolvency (London) Limited, have assessed the firm’s assets and have put forward proposals as to how they will proceed with the administration. The administrators have written to creditors in respect of their proposals including the process for making a claim.

The FCA has limited powers over the, usually unauthorised, issuers of mini-bonds. These unregulated mini-bond schemes do not automatically qualify for protection from the Financial Services Compensation Scheme (FSCS) however Bond holders can bring claims themselves to the FSCS but may find themselves directed elsewhere.

The FSCS has determined that B&G Finance may have mis-sold B&G bonds from 1 March 2018 and is now accepting claims. It is also aware that other authorised firms were responsible for information that was provided to customers who could have been mis-sold B&G mini-bonds between 31 October 2016 and 1 March 2018. Where this is the case, the FSCS will be able to consider a claim against B&G Finance if a customer ‘rolled-over’, or reinvested, their investment through B&G Finance from 1 March 2018.

They have determined that, due to the mis-selling of these mini-bonds, many Basset & Gold bondholders who bought their mini-bonds through B&G Finance Ltd may be able to claim compensation up to the £85,000 limit.  However, given the complexities of matters relating to the arranging and selling of B&G bonds over time, the FSCS has determined that it will need to assess each case on its own merit. This means in order for the FSCS to pay compensation, there has to be evidence that mis-selling occurred. They have paid bond holders £3.2 Million so far. Only 10% of what has been invested.  Additionally, Gallium Fund solutions have now received over 250 complaints against them at the Financial Ombudsman (Source: January 2022 FOI).

Glyn Taylor – Professional Support Lawyer at APJ

“The issuers of these mini-bonds often utilise the services of other companies who are regulated to market, promote and facilitate applications from prospective bondholders.”

Basset & Gold’s Innovative Finance ISA-eligible products were marketed as ‘pensioner bonds,’ which Glyn Taylor, support lawyer at APJ Solicitors, says created a risk that investors could confuse them with government backed NS&I guaranteed growth bonds.

“One of the concerning aspects of the Basset & Gold mini-bond collapse related to many of the investors not appreciating that the investment wasn’t safe and secure,” Taylor says. “The bonds were also promoted to senior citizens, and many thought the bonds were similar to the government-backed pensioner income-backed bonds.”

Unravelling the complexities

This requires a detailed analysis of the legal and factual circumstances, collecting evidence to understand whether the investor is eligible for compensation. APJ are specialists in this field and best placed to assist and represent investors where this type of investment bond has failed. We have a dedicated team who will thoroughly investigate and gather the necessary evidence to demonstrate the bond was mis-sold and recover the compensation the investor deserves.

The APJ team have worked within financial law for over 40 years and were able to notice that many of the mini-bond schemes were being issued recklessly and negligently. We are offering expert advice to anyone who may believe they were ill-informed on their investments because we believe they may be eligible to some or all of their investment via the FSCS, should we establish liability and prove mis-selling was involved.

If you purchased any Mini-Bond as a retail (non-professional) investor you could have been mis-sold contact us today for help.