You are here: Home - Investing - Experienced Investor - News -

Watchdog slams the breaks on car investment scheme

Written by: Emma Lunn
The Financial Conduct Authority (FCA) has halted new business at Buy2LetCars, while the regulator investigates the company.

Buy2LetCars borrows money from investors, promising them annual returns of up to 11% for a three-year investment of a minimum of £7,000. It then uses the money to buy new cars and leases them to people with a poor credit history via another company called Wheels4Sure.

Investors receive their capital back via monthly payments over the term of the loan, with interest paid at the end of the term.

The FCA has imposed a number of restrictions on Buy2LetCars’ parent company Raedex Consortium Ltd. The restrictions require the firm to cease conducting regulated activities because of “concerns about its finances”.

The move means new car leases can no longer be issued by the firm – but payments on existing contracts will continue to be taken as usual.

How long Raedex will have restrictions imposed is not yet clear. Firms which are FCA authorised need to meet ‘threshold conditions’. If the firm can demonstrate to the FCA that it is meeting threshold conditions, then the restrictions can be removed and it can continue to trade.

The FCA has warned investors looking to invest in hire cars that they should not make investments through Buy2LetCars as the money can no longer be invested in cars which are then leased out.

Existing investors should talk to Buy2LetCars if they have any questions. It’s unlikely any worried investors will be able to get their money out of the scheme straight away as these investments are loan agreements as opposed to a liquid investment.

The type of investment offered by Buy2LetCars isn’t regulated, so investors don’t have recourse to the Financial Ombudsman. However, the FCA has the power to prevent the company from arranging new leases.

The FCA said it had had concerns about the company for some time.

A statement from Buy2LetCars said: “We are surprised at the FCA’s interpretation of accepted accounting standards and principles. Although our company is well financed with a strong cashflow and bank balance, the FCA is putting 24 jobs at risk with this bizarre decision. We would like to reassure our customers that we fully intend to challenge this and will be in touch with them directly this week.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week