Mini-Bonds Banned for Sale to Retail Investors

FCA makes permanent the temporary ban on high risk bonds, which have lost investors millions in recent years, and plans to extend the range of products that can't be promoted

James Gard 18 June, 2020 | 9:41AM

FCA building

Mini-bonds will no longer be sold to retail investors after the Financial Conduct Authority decided to make its ban on the controversial products permanent.

The FCA banned the sale of what it calls “speculative illiquid securities” in January after a number of scandals in which the companies selling the bonds have gone under, losing investors significant sums. The most high profile of these was the collapse of London Capital & Finance, which went into administration in 2019, putting at risk £230 million invested by more than 11,000 people. Just 1% of these investments are eligible for redress under the Financial Services Compensation Scheme (FSCS) as most investors bought the mini-bonds after switching out of regulated products such as Stocks & Shares Isas.

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James Gard  is content editor for Morningstar.co.uk

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