Football Index Enters Administration
Customers of Football Index, the football share trading platform, are anxiously waiting to find out what happens to their funds after their parent company entered administration. Many took to social media to vent their anger over the decision.
BetIndex, owners of the Football Index share trading platform, have called in the administrators over financial difficulties, leaving many customers in the dark over the future of their funds.
The company released a 400-word statement via the Football Index website, announcing they had hired insolvency specialists Begbies Traynor. The goal was to continue with the platform in a “restructured form”. The company stated that a restructuring could involve equity in BetIndex “being distributed to customers, board representation for customers, and a new management team”.
BetIndex had previously suspended the Football Index platform, which had prevented customers from withdrawing any funds in their accounts. The Gambling Commission subsequently suspended the company’s operating licence.
The industry trade body, the Betting and Gaming Council has also revoked BetIndex’s membership; a spokesperson for the council said: “Following the suspension of their operating licence by the Gambling Commission, we are immediately suspending BetIndex Ltd’s membership of the BGC while the details of the case are investigated.
“As the standards body representing the regulated industry, our top priority is ensuring that the interests of BetIndex Ltd’s customers are protected.”
In suspending BetIndex’s licence, the regulator confirmed it had been investigating the company and believed the operator’s activities may not have been in accordance with its licence conditions and concluded, “Football Index may not be suitable to carry on with licensed activities”.
BetIndex has maintained that cash balances are held in a separate account managed by the company’s advisors by trust arrangements that the administrators review.
Under the terms and conditions for opening a Football Index account, section 11.2 states they have trust arrangements in place with their bank to ensure funds are returned to customers in the “unlikely event of administration”.
While that may sound promising to customers, it continues: This means that steps have been taken to protect your funds but that there is no guarantee all funds will be repaid in the event of insolvency.”
If the company is unable to raise further funds or find a buyer for the company, it does raise serious questions on how the company could get into this situation and why the regulator did not act quickly to protect consumers.
Launched in 2015, the Football Index looked to benefit from football’s huge popularity by releasing “shares” in players. Positioned as a three-year investment, buyers of these shares benefit from dividend payments. The better a player’s onfield performance, such as appearances and goals scored, the higher a player’s stock would rise. A player’s price could also be affected due to news stories or social media activity. As with traditional share dealing, prices can fall as well as rise.
The first that many customers learnt about troubles at the company came when the Football Index gave notice of a slashing of the dividends that shares would earn. Where previously a share could have earned up to a maximum of 12p, this was replaced by much more meagre dividends, with most earning between 1p and 2p.
As was the case when dividends were slashed, angry customers took to social media when the news of the administration was announced.
One customer with the handle ArtfulWalker wrote: “From a 35k portfolio to nothing in nine months, what an epic collapse this has been brought on by greed and mismanagement”.
Many customers have called Football Index a scam and have likened the platform to a Ponzi scheme.
Football Index was the main shirt sponsor for both QPR and Nottingham Forest; the Mail Online has reported that the Championship clubs have recently cancelled these deals.