Updated Financial Promotions Regulation
Risk summary for non-readily realisable securities which are shares
Estimated reading time: 2 minutes
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
- If the business you invest in fails, you are likely to lose 100% of the money you invested. Most start-up businesses fail.
2. You are unlikely to be protected if something goes wrong
The company you are investing in and Beach Equity
The business you are investing in is not regulated by the FCA.
Beach Equity Investments LLP is arranging the investment and is regulated by the FCA.
The Financial Services Compensation Scheme (FSCS)
Protection from the FSCS only considers claims against failed regulated firms. Protection from the FSCS in relation to claims against failed regulated firms does not consider poor investment performance. Learn more about FSCS protection here. [https://www.fscs.org.uk/what-we-cover/investments/]
The Financial Ombudsman Service (FOS)
FOS will not be able to consider complaints related to the business you have invested in. If you have a complaint against Beach Equity as an FCA-regulated firm, FOS may be able to consider it. It does not consider complaints with regards to poor investment performance. Please see the complaints handling section of our terms and conditions for how to raise complaints.
Learn more about FOS protection here. [https://www.financial-ombudsman.org.uk/consumers]
3. You won’t get your money back quickly
- Even if the business you invest in is successful, it may take several years to get your money back. You are unlikely to be able to sell your investment early.
- The most likely way to get your money back is if the business is bought by another business or lists its shares on an exchange such as the London Stock Exchange. These events are not common.
- If you are investing in a start-up business, you should not expect to get your money back through dividends. Start-up businesses rarely pay these.
4. Don’t put all your eggs in one basket
- Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments. [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest]
5. The value of your investment can be reduced
- The percentage of the business that you own will decrease if the business issues more shares. This could mean that the value of your investment reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.
- These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment.
If you are interested in learning more about how to protect yourself, visit the FCA’s website here. [https://www.fca.org.uk/investsmart]
Risk summary for non-readily realisable securities which are debentures, debt or other debt like structures.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
- If the business you are investing in fails, there is a high risk that you will lose your money. Most start-up and early-stage businesses fail.
- Advertised rates of return aren’t guaranteed. This is not a savings account. If the borrower doesn’t pay you back as agreed, you could earn less money than expected. A higher advertised rate of return means a higher risk of losing your money. If it looks too good to be true, it probably is.
- These investments are sometimes held in an Innovative Finance ISA (IFISA). An IFISA does not reduce the risk of the investment or protect you from losses, so you can still lose all your money. It only means that any potential gains from your investment will be tax free.
2. You are unlikely to be protected if something goes wrong
The company you are investing in and Beach Equity
The business you are investing in is not regulated by the FCA.
Beach Equity Investments LLP is arranging the investment and is regulated by the FCA.
The Financial Services Compensation Scheme (FSCS)
Protection from the FSCS only considers claims against failed regulated firms. Protection from the FSCS in relation to claims against failed regulated firms does not consider poor investment performance. Learn more about FSCS protection here. [https://www.fscs.org.uk/what-we-cover/investments/]
The Financial Ombudsman Service (FOS)
FOS will not be able to consider complaints related to the business you have invested in. If you have a complaint against Beach Equity as an FCA-regulated firm, FOS may be able to consider it. It does not consider complaints with regards to poor investment performance. Please see the complaints handling section of our terms and conditions for how to raise complaints.
Learn more about FOS protection here. [https://www.financial-ombudsman.org.uk/consumers]
3. You are unlikely to get your money back quickly
- Debentures, debt or other debt like structures can last for several years, so you should be prepared to wait for your money to be returned even if the business you’re investing in repays on time.
- You are unlikely to be able to cash in your investment early the debenture, debt or other debt like structure. You are usually locked in until the business has paid you back over the period agreed.
4. Don’t put all your eggs in one basket
- Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.
- A good rule of thumb is not to invest more than 10% of your money in high-risk investments. [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest]
If you are interested in learning more about how to protect yourself, visit the FCA’s website here. [https://www.fca.org.uk/investsmart]
Definitions
| Term | Definition |
|---|---|
| Share | a share or stock in the share capital of any body corporate (wherever incorporated); |
| Debenture | any of the following which are not government and public securities:debentures;debenture stock;loan stock;bondscertificates of deposit;any other instrument creating or acknowledging indebtedness. |
| Debt and debt like structures | And capital invested based on a debt or debt like structure which requires the investor to place capital at risk to receive interest, paid or rolled and paid at the end of the term, and the repayment of capital at the end of a term. The structure may allow, or force, the dent to be paid back as equity, which further prolongs the period your capital is at risk. |
| non-readily realisable | It is difficult, or impossible, to sell before it matures or there is an exit event, and includes a security that:is not admitted to any official listing on an exchangeis not a packaged productis not a mutual society shareis not a credit union subordinated debtis not a non-mass market investment |
| Restricted mass market investment (RMMIs) | Beach Equity is permitted to arrange deals in RMMIs which include any of the following:(a) a non-readily realisable security;(b) a P2P agreement;(c) a P2P portfolio;(d) a unit in a long-term asset fund; |
| Non mass market investment | These are very high risk investments which Beach Equity do not arrange deals in, which includes either of the following:(a) a non-mainstream pooled investment;(b) a speculative illiquid security. |
