How to protect yourself in an unregulated investment

Sometimes when an investment goes wrong, you can be left feeling really isolated, powerless, and hopeless. You may think: “How can I, one individual, fight this?” But few creditors are aware of the power they can obtain simply by uniting with others – because unity is strength.

So, we’re here to shed some light on why creditors’ action groups are often the best course of action in the quest to recover your hard-earned funds.

What is a creditors’ action group?

A creditors’ action group develops when a body of investor-creditor rally together to form a group with a plan to recover their funds. This can be done via an insolvency practitioner, law firm, or independent advisory such as Insolvency & Law. Whichever route you end up choosing, strength in numbers will ensure that your voice is heard.

When a healthy percentage of investor-creditors band together in liquidation and administration procedures, the courts are more likely to hear their perspective and take their wants into consideration when making crucial decisions.

A creditors’ action group is especially important if you’re trying to retrieve funds from an unregulated investment. If something goes wrong, you won’t be eligible for redress because the Financial Services Compensation Scheme doesn’t cover unregulated investments.

Unregulated investments can be ‘proposed’ to investors who certify themselves as sophisticated or high-net-worth. However, the Financial Conduct Authority bans their promotion to the general public.

Innocent investors

Still, some unregulated investments fall through the cracks. As a result, innocent investors are being duped (more of this in our next blog post).

These companies may try to stall and make excuses for why you have not received any returns. They may answer all of your queries, and appear to be supportive of investors. But in reality their main focus is to save themselves.

This is another reason creditor action groups are key. They can help to ensure that vulnerable individuals are not manipulated with empty promises.

It’s important to remember, the prospect of losing an investment puts many people in a vulnerable, and scary position. For many investor-creditors, having the support of others in the same situation can be just as powerful as the desire to fight for funds.