Banks should not compensate consumers simply because an investment goes wrong.

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Investment involves risk. Sometimes businesses fail, investments collapse and people lose money. That’s an uncomfortable reality, but it doesn’t automatically make somebody else responsible for the loss.

But what happens when an investment is alleged to have been something very different? That’s the uncomfortable question raised by the collapse of Godwin Capital.

Around £160 million was raised from approximately 2,500 investors through loan notes. The company subsequently collapsed and investors are reportedly expected to recover just 5p for every £1 they invested.

Insolvency practitioners have alleged the business operated as a Ponzi scheme and a £155 million claim has........

© LBC