If you have an unexpected benefit – or simply looking for higher returns for your savings – chances are you've searched online for the best rates. And it is likely that you will meet a young company that, despite a few years of business, is earning millions of pounds sterling on the sale of high-risk bonds, exposing savers to the possibility of losing everything.
Taking up to 25% commission, Surge Financial helped to collect a fortune from the public. Part of its marketing arsenal includes the use of websites that some financial advisers consider misleading and likely to violate the rules of the financial authorities. Surge, however, denies any wrongdoing.
The money was invested in bonds, especially those of two high risk investment companies. One of them, London Capital & Finance, has invested millions of pounds of bond money in risky projects related to a former director.
The other, Blackmore Bond, is headed by a group accused of misleading investors in pensions in a BBC documentary of 2017 – allegations that he has firmly denied.
Shortly before Christmas, the Financial Conduct Authority ordered London Capital & Finance to withdraw its ISA and its bond marketing, and then deny it any access to its assets without the prior approval of the regulator.
Interest and principal payments to investors – including senior savers – have also been suspended.
This action has caused consternation among London Capital & Finance investors and, as we will see, those to whom it has lent.
Surge was created in 2015 by Paul Careless.
A so-called entrepreneur and life coach, Careless Pen regularly gives advice on David Brent's style on social media for fans. "Some kids dream of being astronauts. Few really become one, "he says. Such pearls are served with pictures of him with Aston Martins, Ferraris and luxury watches.
He emphasizes his former life in the military and police, but does not mention that his policing career was not spotless.
He left after being convicted of dangerous driving following a head-on collision that he caused during a police chase that left four injured.
He was fined £ 500 and six points on his license. When asked, Careless responds that it was 20 years ago and he resigned for other reasons.
He also failed to mention that his previous venture – an online legal advisory service – had failed, leaving bakery entrepreneur Valerie Luke Johnson, losing "his entire investment: £ 100,000 to £ 200,000," said Johnson's spokesperson. Careless says he's suffered bigger losses.
Surge was created in 2015 by Paul Careless (above)
Surge's current business model is far more successful and offers a revealing lesson on modern financial marketing.
If you're looking for a better return on your money, it's likely you're heading to Google and grabbing "better rates for investments" or "better rates for bonds and ISAs". At the top of the page, one of the three seemingly unrelated price comparison websites with names such as "top-isa-rates" appears.
These "comparators" would list eight or nine products, including accounts such as Coventry Building Society, Halifax and Virgin Money, with annual interest ranging from 1% to 2%. There may be some peer-to-peer lenders offering a bit more but, at the top of each list, two outliers appear:
London Capital & Finance (up to its suspension) and Blackmore Bond, with 8% or 9%. Most people would click on the top rated products – you would not be angry. Comparators hardly know that these two bonds are very risky – not cash ISAs or savings accounts.
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But, you could say, it's not the fault of the comparators – they are only an independent aggregator, right? Not enough.
They are run by a company called RPDigitalServices, which shares with Surge a director, employees and its head office in Brighton. And, as we have heard, Surge is the marketing agent for Blackmore and London Capital & Finance. It is understood that the pair does not approve or control the marketing of the websites.
Blackmore describes Surge as his "strategic partner" – providing an outsourced sales force and other services related to client administration. To do this, she paid Surge £ 5.1 million in just one year, according to the latest accounts of the bond company. Blackmore is a major company. Last year, investors injected 1.5 million pounds a month.
The London Capital & Finance literature claims to have invested more than £ 195 million in its bonds. According to his accounts last year, he had 11 "borrowing companies" and issued 54 million pounds of bonds.
No wonder Careless claims that his empire generates £ 50 million a year and makes a profit of £ 15 million.
The power of the three comparison sites is amazing. Web traffic data shows that of the people who clicked on London Capital & Finance in the last six months, 62% came from the trio.
Do these websites do anything against the rules? IFA Sam Blanning, from Star House Financial Services, believes so.
"Most promotions for investments such as London Capital & Finance that are publicly available, including via Google, must be approved by a person authorized by the FCA. Investment announcements must also be clear, fair and not misleading. Placing unregulated high-risk bonds in ISAs in cash as if they were comparable is the opposite. "
One of the comparison sites said, "Comparing ISA standards is incredibly difficult right now because there are so many variables" and Careless denies any wrongdoing.
He says that Surge and RPDigitalServices have staff in common but operate separately. The comparison sites list standard savings accounts alongside high risk bonds, he said, in order to offer a range of options to potential clients.
"If all products were identical, it would not give many people to compare," he says, comparing his activities to those such as moneysavingexpert.
Careless rightly adds that when you access Blackmore and, until its suspension, London Capital & Finance, their literature indicates that these are high-risk products for sophisticated investors and that their capital is stake.
There are many rich characters around Surge, next to Careless.
One is Spencer Golding. He is currently serving as a director for a period of eight years, ending later this year, due to misdeeds committed during the vacation period.
Part of the ban was to serve as a director when his bankruptcy in 2006 banned him. Despite this, he leads a rich life in Kent and flies in his own helicopter.
Careless says Golding has introduced Surge into London Capital & Finance.
Golding is a friend of Simon Hume-Kendall, who created London Capital & Finance's precursor.
A former president of the Daily Sport newspaper, Hume-Kendall created the Southeastern County Finance Department in July 2012.
In 2015, he was renamed London Capital & Finance, although Hume-Kendall left the company in 2013.
He had decided to spend more time on another project, transforming a struggling holiday park in Cornwall. From around 2016, the park started borrowing millions of pounds from London Capital & Finance, taking its last loan a few months ago.
London Capital & Finance's current CEO, Andy Thomson, worked with Hume-Kendall for a time at the park.
Hume-Kendall has also borrowed millions of dollars from London Capital & Finance from another of its companies, London Oil & Gas. The LoG used this money to finance loans to Independent Oil & Gas, a North Sea explorer listed on the stock exchange.
Its loans to Independent now total £ 38.6 million.
For example, FCA's campaign with London Capital & Finance on the occasion of Christmas sparked serious concerns among independent shareholders.
The LoG ensured that it had access to other sources of financing than London Capital & Finance, but brokers and shareholders remain confused.
Hume-Kendall's spokesman said all London Capital & Finance loans were made under normal terms and without preferential rates.
After earning pay in high-risk bonds, Careless recently implemented other projects under the umbrella of Surge, including a recruitment company that pays Johnny MP, a federal MP, a record sum of £ 80,000. per year as a non-executive director.
Careless says, "I served my country as a soldier, police officer and contractor, creating jobs and paying taxes."
As the suspension of London Capital & Finance's sales continues, it could find such a success more difficult to find. But he will undoubtedly be fearless.
One of his mottos is: "Play to win … What is the goal otherwise? Let's go big, baby. "