Investors in a company that promised bumper returns from a car hire scheme fear significant losses after it collapsed into administration, signalling potential embarrassment for the City regulator.
Buy2Let Cars and its parent company Raedex Consortium entered administration on Tuesday, weeks after the Financial Conduct Authority (FCA) told it to stop taking new business due to concerns about its finances.
The company’s founder, Reginald Larry-Cole, did not answer emailed requests for comment and has deleted his Twitter account. A company spokesperson was unable to reach directors.
Buy2LetCars promised annual returns of up to 11% to investors who lent the company a minimum of £7,000 over three years. It used the money to buy new cars, which it then leased to people with a poor credit history via Wheels4Sure.
Investors received monthly payments over the term of the loan, with interest paid at the end of the term.
Several users of customer reviews website Trustpilot, who are anonymous, claimed to be fearful that they had lost large sums.
“Not sure what’s going on but very worried spent all my saving on this,” said one.
Another said: “I’ve invested over 60k in this company, could someone help me, on what do next as no one is picking up their phone.”
Consumer finance campaigner Mark Taber and Dominic Lindley, former leader of the financial services policy team at Which?, said they had flagged up their concerns about the company to the FCA in 2019.
“For years [Raedex] had massive losses, massive negative assets and it’s just been getting slowly worse year after year,” said Taber.
“The FCA just let it carry on. They could have [intervened] years ago.”
The FCA does not regulate the leasing of cars via Buy2Let Cars but did regulate investments in Raedex.
The regulator ordered Raedex to cease trading in February, citing “serious concerns” about its finance.
In a statement, the FCA said the directors had appointed administrators after taking “further financial accounting advice”.
Accounting firm RSM, which has been appointed as administrator, said it would try to recoup funds for investors.
“Lease agreements between Raedex and its existing customers remain in place; anyone leasing a vehicle from Raedex should continue to pay their monthly payment in the normal way to secure their ongoing usage of the vehicle,” it said.
The administrators are now evaluating the current financial position and options for each of the Raedex Group companies. They will seek to achieve the best outcome for each company’s creditors as a whole.
“It is too early for the administrators to conclude how much money they will be able to return to the creditors of each company in the Raedex Group, or within what timeframe.”