Northern Provident Investments (NPI), a provider of high-risk “mini-bonds”,  has entered creditors’ voluntary liquidation. 

Regulator, the Financial Conduct Authority (FCA), has also issued a warning to customers saying they are now at ‘high risk’ of being scammed. It said: “We are notifying consumers of NPI’s liquidation and warning them of the danger of scammers contacting them.”

The regulator added: “All customers should remain alert to the possibility of fraud. Given the large number of mini-bonds that NPI distributed via its 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 if things go wrong.”

What was Northern Provident Investments?

NPI operated a platform where customers could buy a range of investment products and also promoted other providers – this included the Blackmore Bond, which was a mini-bond that entered administration in April 2020, and owed £46 million to investors.

Blackmore Bond used investors’ funds for an unregulated property scheme and it has since been reported that investors have lost all their money.

In February 2020, the FCA blocked NPI from any further financial promotions.

The Financial Services Compensation Scheme issued the following statement on NPI: “From 27 July 2015, NPI was authorised by the Financial Conduct Authority and operated a debt-based crowdfunding platform where customers could buy illiquid debt securities and shares. NPI typically acted as an Isa manager for the investments on offer, many of which were mini-bonds.”

What are Mini-Bonds?

The FSCS added: “Investments in mini-bonds commonly offer customers high returns, but are both high risk and highly illiquid. Customers may find it difficult to sell their investments if they need to access the money they invested. NPI did not hold customers’ investments themselves. Despite the failure of NPI, customers will, therefore, continue to hold their investments, either directly or within an Isa wrapper.

“FSCS is aware that certain investments have failed. We’re also aware that some customers paid money to NPI to invest on their behalf and that money has not yet been invested. FSCS is in the early stages of investigating whether there are any claims against NPI that meet the qualifying conditions for compensation.”