FCA confirms mini-bond marketing ban

Ban follows ordeal experienced by retail investors in London Capital & Finance mini-bonds.

Commenting on the Financial Conduct Authority’s confirmation that it is to permanently ban the mass-marketing of speculative illiquid securities - including speculative mini-bonds - to retail investors, Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The ban was only a matter of time following the ordeal experienced by investors of London Capital & Finance mini-bonds, who fell prey to misleading marketing of the high-risk unregulated mini-bonds promising returns of 8%– costing them dearly.

“The temptation to invest in a mini bond offering an impressive yield and, in some instances, additional perks to sweeten the deal has been significant – compounded by the low interest rate environment which has wreaked havoc on saving rates. But the high-risk nature of these products is not something that is easily understood by experienced investors, let alone the everyday investor. They are not listed on the stock exchange and typically must be held to maturity before you can get your money back. 

“It’s another cautionary reminder that there is no such thing as a free lunch when it comes to investments. It is important for investors to look under the bonnet of investment propositions and do their homework to ensure that they understand the risks involved. If something looks too good to be true – it probably is.”