Co-op investor pleas rejected by watchdog

Tim Wallace
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RETAIL investors who face losing money in the troubled Co-op Bank are not set to get any relief from the authorities, Britain’s top regulator said yesterday.

Bondholders have complained they were misled by the bank and the regulators into thinking their investments in bonds were safe, only to find their money under threat.

But Financial Conduct Authority (FCA) head Martin Wheatley said they should take up any complaints over mis-selling with their financial advisers or brokers.

“Their investments are not deposits – they are bonds and they are subject to risks,” Wheatley said.

“The Britannia prospectus had a warning of the risks. But not all investors bought at the point of issue – if they feel they were misled the route to complain is through their adviser or then the Financial Ombudsman.”

The Co-op Bank has a £1.5bn capital hole, around one-third of which is expected to be filled by junior bondholders. The bank’s plan is to offer a mix of new bonds in the Co-op Group and shares in the newly-floated Co-op Bank.

Up to 1,500 retail bondholders have joined a campaign group led by fixed income investor Mark Taber, who has written to the FCA and the Bank of England’s prudential regulation authority (PRA) to complain about their treatment.

Taber believes the comments show the FCA failing to act to protect vulnerable consumers.

“This is pretty ripe – it is not exactly a normal situation,” Taber said.

“There has been a false market in these bonds for years as the regulator did not make the bank address its problems, nor did they tell markets the problems existed.”

He also argues the bonds were heavily marketed at the time as very safe investments that were on a par with deposits.

The FCA and the PRA are both expected to give fuller replies to Taber’s group in the coming weeks.