A long-standing client of mine, Sanjay, discovered a property bond offering a high-income level in late 2017. The company was Bankway Properties and the investment was called Bankway HMO Property Bond.
He invested £10,000 in exchange for a monthly income of £700 or 84% a year. A very attractive interest rate indeed. He became worried in January 2018 when his first monthly dividend payment was missed. He has never received a dividend since nor has he received his money back. He was scammed.
The company’s staff were very convincing and reassuring at the start. They boasted of the 57-year-old trading history of the company. They had a prestigious address at Berkeley Street in the West End of London. They claimed that investments with them were placed with regulated businesses even though there was no reference to FCA regulation on their own letterhead. They claimed they were an appointed representative of Finanzlobby Finance & Marketing Solutions GmbH. They even quoted the company’s reference number implying it was their FCA registration number.
There is a company called Bankway Properties Limited. It has been trading for 57 years. It has never been regulated by the FCA. It doesn’t need to be. It has never traded from Berkeley Street. The company’s name was used as a clone. The real company had no idea they were being cloned.
Sanjay repeatedly asked them who they were registered with but he never got a clear reply. He was even given a receipt and a share certificate. When he asked for his money back in January 2018 he was told there would be an early release fee of £971 and, because he refused to pay it, they confirmed that there would be a 24 weeks investigation after which there was no guarantee he would get his money back.
Unfortunately, Sanjay did not contact me until after he had already invested the money. By then it was too late.
So what lessons can we learn from this scam?
The first lesson is that when you are offered a very high income or a high capital return and it sounds too good to be true you must question it. If it sounds too good to be true it usually is.
Secondly, make sure the business is regulated by the FCA and that the company’s letterhead not only confirms it is FCA regulated but its FCA registration number is given. You should then check the registration number on the FCA website:
The regulated business has to issue terms of business and a client agreement. You will typically be given 2-4 weeks to change your mind without penalty depending on the product.
Check the company’s legal status and its address.
If you are unsure about the company ask for three investors’ contact details so that you can find out what they think of the company. If the company refuses to give you these contact details then do not invest with the company.
These are just a few simple checks you can carry out. I recommend that you use these tips as a checklist when you are investing. That way you will not be scammed like Sanjay.
If you or any colleagues or friends come across similar incidents you should contact the FCA and Action Fraud, which is the UK’s national fraud and cybercrime reporting centre.* You know it makes sense.
*The contents of this blog are for information purposes only and do not constitute individual advice. You should always seek professional advice from a specialist.