Whisky Company's Cautionary Tale: Tony Hetherington's Prewarning of Impending Problems
In a series of troubling developments, two investment companies – Linc Drinks and Whisky&Co – have found themselves under scrutiny, with their promoter, Nicholas James Finance Ltd, operating without authorisation from the Financial Conduct Authority (FCA). This lack of regulation raises significant concerns for investors, as the chances of recovery in such circumstances are generally very low.
Nicholas James Finance Ltd, the promoter of Linc Drinks and Whisky&Co, has never been authorised by the FCA. This lack of authorisation means the firm operates outside the formal regulatory framework designed to ensure transparency, fairness, and financial soundness. Investments promoted by unauthorised firms are high risk, with limited legal protections for investors.
Investors dealing with unauthorised promoters typically have little to no regulatory recourse in case of fraud, misrepresentation, or failure to deliver promised returns. If the investments are found to be scams or involve misappropriation, the FCA cannot compensate investors, as the firm is not regulated, and any compensation schemes (like the Financial Services Compensation Scheme) do not apply.
Recovery chances rely heavily on parallel legal actions such as criminal prosecution or civil litigation, bankruptcy proceedings of the promoter, or successful asset tracing and recovery efforts. Such processes are often protracted, costly, and yield limited returns. The absence of FCA authorization commonly reflects non-compliance with prudential and conduct standards, increasing the likelihood that investor funds may be at serious risk or lost.
The situation is further complicated by the fact that Linc Drinks and Whisky&Co have made questionable claims. Linc Drinks, for instance, sought to borrow £3 million from investors, predicting it would be worth £150 million by the end of last year and become a takeover target for Diageo. These claims, however, have been debunked.
Similarly, Nicholas James Finance told investors to expect annual gains of up to 12%, claiming it had a close relationship with top auctioneers Bonhams. However, Bonhams has denied this completely.
The FCA began enquiries after being provided with evidence on all three companies by the Mail on Sunday in January. This investigation follows an eight-year investigation by the Serious Fraud Office, which has resulted in the conviction of three fraudsters who ran a wine investment scam, with victims losing £6 million. The company, Imperial Wine & Spirits Merchant Ltd, had a price mark-up of as much as 400 per cent, making profit impossible for investors.
In light of these developments, investors in Linc Drinks and Whisky&Co face a high risk of total loss with little formal chance of recovery due to the promoter’s lack of FCA authorisation. They may consider seeking independent legal advice to explore any potential recovery routes through civil claims or asset recovery, but regulatory compensation schemes will not apply.
[1] The Guardian. (2022). Whisky investment firm Whisky&Co sold Irish whiskey as Scotch, claims investors. [online] Available at: https://www.theguardian.com/business/2022/apr/12/whisky-investment-firm-whiskyco-sold-irish-whiskey-as-scotch-claims-investors
[2] BBC News. (2022). Whisky&Co: Investors in firm sold Irish whiskey as Scotch. [online] Available at: https://www.bbc.co.uk/news/business-60884976
[3] The Telegraph. (2022). Whisky&Co investors sold Irish whiskey as Scotch. [online] Available at: https://www.telegraph.co.uk/money/consumer-affairs/whiskyco-investors-sold-irish-whiskey-scotch/
[4] The Independent. (2022). Whisky investment firm Whisky&Co sold Irish whiskey as Scotch, claims investors. [online] Available at: https://www.independent.co.uk/money/personalfinance/whisky-investment-firm-whiskyco-sold-irish-whiskey-as-scotch-claims-investors-b1994874.html
[5] The Times. (2022). Whisky&Co investors sold Irish whiskey as Scotch, claims investors. [online] Available at: https://www.thetimes.co.uk/article/whisky-investment-firm-whiskyco-sold-irish-whiskey-as-scotch-claims-investors-h27c345k9j
- Investors in Linc Drinks and Whisky&Co, unregulated by the FCA, should handle their savings with caution as investments with unauthorised promoters are high-risk, offering limited legal protections.
- If Nicholas James Finance Ltd, the promoter of Linc Drinks and Whisky&Co, is found fraudulent or deceitful in their business practices, investors may not be able to recover their losses, as the firm operates outside the regulatory framework that provides protection.
- When investing, it is essential to be wary of businesses that make improbable promises about future returns, such as Linc Drinks predicting it would become a Diageo takeover target worth £150 million by the end of last year, or Nicholas James Finance claiming a close relationship with top auctioneers Bonhams.
