The Financial Conduct Authority has apologised to investors of collapsed investment firm Collateral for failing to “act faster” to stop its fraudulent activities.
The firm, which offered peer-to-peer style investments, duped investors into believing that it was authorised and regulated by the FCA.
The regulator said the firm exploited a loophole that granted interim permission to firms who transferred from the Office of Fair Trading to the FCA in 2014.
According to the regulator, the Collateral directors Peter Currie and Andrew Currie fraudulently changed details about the firms’ public entry on the FCA’s interim permission register in December 2015.
They swapped the details of a separate company they had agreed to sell – Regal Pawnbrokers Ltd – for the details of Collateral on the FCA’s public register.
Over the following 18 months, the company was advertised as authorised by the FCA to encourage people to invest in loans on the Collateral platform.
In March 2016, the firm applied to the regulator for full authorisation. Following an investigation, FCA notified the directors that it had uncovered the register change and ordered Collateral to cease unauthorised business.
After this, Collateral not only continued to receive investments, but Peter and Andrew Currie also removed approximately £750,000 from Collateral client accounts.
The Curries also appointed an administrator without informing the FCA as they were required to and transferred £88,000 from Collateral funds.
The FCA successfully challenged the appointment of this administrator in court. A new administrator estimated that of the £17.9m in customer loans outstanding at the time of Collateral’s collapse, approximately £11m will not be recovered.
In July 2023, the Curries were jailed for their role in the fraud following an FCA prosecution.
Stephen Braviner Roman, general counsel and executive director of legal, risk, compliance and corporate governance at the FCA, said: “While the fraudulent actions of Mr and Mr Currie were the cause of Collateral investors’ losses, we recognise we could have acted faster. For that, we apologise.”
The FCA said it received over 300 complaints from investors after the firm collapsed.
These included a failure to maintain the correct information on the register and a failure to alert investors when the regulator became aware of the incorrect information.
It upheld the complaints and has apologised to the complainants. The FCA pledged to pay £500 in compensation “in recognition of the contribution to the distress and inconvenience” caused by its errors.
Further payments of £150 will be made for delays in complaints handling.
The FCA said it is aware that there may be other Collateral investors who have not complained. It has set up a dedicated complaint form for these people to provide their details and has called on them to do so before 31 March 2025.
