Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps (a) his Department and (b) the Financial Conduct Authority are taking to (i) investigate the collapse of Blackmore Bond plc and (ii) ensure consumer protections on related matters.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

The Financial Conduct Authority (FCA) is responsible for ensuring consumer protection for a broad range of financial services products and HM Treasury works closely with the FCA to maintain a strong and safe financial system.

The FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. Where problems fall outside the FCA’s statutory remit, they assist other agencies and regulators wherever they can. In the case of Blackmore Bond, the FCA passed relevant information to the City of London Police.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of establishing a judge-led inquiry on the Financial Conduct Authority's handling of Blackmore Bonds plc.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

The Government considers it is important that there are appropriate mechanisms in place to ensure the financial services regulators are accountable for all aspects of their performance.

The Financial Conduct Authority (FCA) is responsible for ensuring consumer protection for a broad range of financial services products and HM Treasury works closely with the FCA to maintain a strong and safe financial system. However, the FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities.

Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The Government therefore has no plans to establish a judge-led inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of extending access to the Financial Services Compensation Scheme to all those affected by the collapse of the Blackmore Bond plc.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

The Government considers it is important that there are appropriate mechanisms in place to ensure the financial services regulators are accountable for all aspects of their performance.

The Financial Conduct Authority (FCA) is responsible for ensuring consumer protection for a broad range of financial services products and HM Treasury works closely with the FCA to maintain a strong and safe financial system. However, the FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities.

Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The Government therefore has no plans to establish a judge-led inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions he has had with Cabinet colleagues on addressing the accountability of financial regulators after the collapse of Blackmore Bond plc.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

The Government considers it is vitally important that there are appropriate mechanisms in place to ensure the financial services regulators are accountable for all aspects of their performance.

The FCA is responsible for ensuring consumer protection for a broad range of financial services products. However, it does not regulate all financial services firms and products. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what discussions he has had the Financial Conduct Authority on the collapse of Blackmore Bond.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

HM Treasury works closely with the FCA to maintain a strong and safe financial system. Treasury Ministers and officials regularly meet with the FCA to discuss a variety of matters.

The FCA does not have power to investigate a firm that is unauthorised and not carrying out regulated activities. Where problems fall outside the FCA’s statutory remit, they assist other agencies and regulators wherever they can. As Blackmore Bond was an unregulated firm, the FCA passed the relevant information to the City of London Police.

In November 2019, the FCA temporarily banned the promotion of high-risk ‘speculative illiquid securities’ to ordinary retail investors. This ban covers the type of mini-bonds sold by Blackmore Bond. This ban was made permanent in January 2021.

In April 2021, the Treasury launched a consultation on proposals for bringing mini-bonds within the scope of regulation. On 1 March 2022 the Treasury set out its intention to include non-transferable securities, including mini-bonds, within the scope of the Prospectus Regime Review. Issuers of mini-bonds would be required to offer their securities via a platform which would ensure appropriate due diligence and disclosure and be regulated by the FCA.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will call for an independent inquiry into the Financial Conduct Authority's handling of the collapse of Blackmore Bonds.

Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)

The Financial Conduct Authority (FCA) is responsible for securing an appropriate degree of consumer protection across a broad range of financial services products. However, it does not regulate all financial services firms and products. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities. The Government therefore has no plans to commission an independent inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he plans to provide compensation to victims of the collapse of Blackmore Bond plc.

Answered by John Glen - Paymaster General and Minister for the Cabinet Office

The Financial Conduct Authority (FCA) is responsible for ensuring consumer protection for a broad range of financial services products. However, it does not regulate all financial services firms and products. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities. The Government therefore has no plans to commission an independent inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.

The Financial Services Compensation Scheme (FSCS) is the compensation scheme of last resort for financial services. The FSCS is an independent non-governmental body that carries out its compensation function within rules set by the FCA and the Prudential Regulation Authority (PRA), who are also independent of Government. The FSCS can only pay compensation in respect of certain regulated activities and the Government is unable to intervene or comment on specific cases and decisions taken by the FSCS.

It is an important point of principle that the Government does not step in to pay compensation in respect of failed financial services firms that fall outside of the FSCS. Doing so would create the wrong set of incentives for individuals and an unnecessary burden on the taxpayer.

In April 2021, the Treasury launched a consultation on proposals for bringing mini-bonds (also known as Non-Transferable Debt Securities) within the scope of regulation. On 1 March 2022 the Treasury published a response setting out its preferred approach and intentions for taking this proposal forward.

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he plans to commission an independent inquiry into the regulators' handling of the collapse Blackmore Bond plc.

Answered by John Glen - Paymaster General and Minister for the Cabinet Office

The Financial Conduct Authority (FCA) is responsible for ensuring consumer protection for a broad range of financial services products. However, it does not regulate all financial services firms and products. Blackmore Bond Plc was not authorised by the FCA and the sale of the ‘mini-bond’ product it offered was not an activity regulated by the FCA. The FCA does not have power to investigate a firm that is unauthorised and not carrying out any regulated activities. The Government therefore has no plans to commission an independent inquiry into the FCA’s handling of the collapse of Blackmore Bond plc.

The Financial Services Compensation Scheme (FSCS) is the compensation scheme of last resort for financial services. The FSCS is an independent non-governmental body that carries out its compensation function within rules set by the FCA and the Prudential Regulation Authority (PRA), who are also independent of Government. The FSCS can only pay compensation in respect of certain regulated activities and the Government is unable to intervene or comment on specific cases and decisions taken by the FSCS.

It is an important point of principle that the Government does not step in to pay compensation in respect of failed financial services firms that fall outside of the FSCS. Doing so would create the wrong set of incentives for individuals and an unnecessary burden on the taxpayer.

In April 2021, the Treasury launched a consultation on proposals for bringing mini-bonds (also known as Non-Transferable Debt Securities) within the scope of regulation. On 1 March 2022 the Treasury published a response setting out its preferred approach and intentions for taking this proposal forward.