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Some 2,000 people lost £46m when Blackmore Bond collapsed. It was claimed a marketing company had used suspect tactics to sell to ordinary people, not experienced investors.
The Financial Conduct Authority (FCA) did not intervene for two years. The FCA said it was not its duty to step in but MPs want an inquiry. The FCA's then chief Andrew Bailey - now head of the Bank of England - declined to comment.
The bond was set up to invest money into UK property developments and the proceeds would supposedly pay back the investors. Blackmore was offering up to 10% per year in interest payments.
The scheme, known as a mini-bond, should by law only be sold to experienced investors, however it was marketed to ordinary people.
The bond collapsed in 2020 amid allegations of suspect sales tactics and inappropriate payments. Direct warnings about the tactics of a company marketing the Blackmore Bond were made to the FCA in 2017 and 2018.
An investigation for BBC Panorama reveals evidence suggesting the FCA could have acted earlier - and may have tried to cover up the fact it did not.
Cross-party MPs, including members of the Treasury Select Committee, have called for an inquiry into the FCA's handling of the Blackmore Bond.
Blackmore victim Paul Stevens, who was forced to retire from work due to an auto-immune disease called myasthenia gravis, invested his ill-health retirement benefit into the fund.
He has been left devastated by the loss and says it has made his illness worse.
"Like many others, we invested a significant amount of money and, as a family, we lost £40,000," he said. "These schemes must stop and the FCA needs to police them."
His wife, Jane, said: "We feel as if we've been turned over twice - first by Blackmore, then by the FCA."
Paul Carlier, a finance and banking expert, first reported his concerns about the marketing of the Blackmore Bond to the FCA in 2017.
His office at the time was next door to the company that was tasked with selling the bond. He overheard their activities and reported them for using high-pressure "boiler room" sales tactics, which are banned.
"[The sales people] were literally cold-calling people and approaching people with an intent to sell them a toxic or worthless investment product, including the Blackmore Bond," he told BBC Panorama.
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Mr Carlier said the office walls were so thin he could hear their pushy techniques, as well as them clapping and high-fiving when they managed to make someone commit to investing. Source: BBC
