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FCA to ban unlisted mini-bonds

GavelThe UK’s Financial Conduct Authority (FCA) is to temporarily ban the mass marketing of speculative mini-bonds to retail customers.

The restriction, which comes into force at the start of next year, will last for 12 months while the regulatory body considers permanent measures.

Mini-bonds refer to a range of investments but according to the FCA, the ban will apply to more complex and opaque arrangements where the funds raised are used to lend to a third party, invest in other companies, or purchase or develop properties.

Andrew Bailey, chief executive of the FCA, said: “We remain concerned at the scope for promotion of mini-bonds to retail investors who do not have the experience to assess and manage the risks involved.

“This risk is heightened by the arrival of the ISA season at the end of the tax year, since it is quite common for mini-bonds to have ISA status, or to claim such even though they do not have the status.”

Companies which raise funds for their own activities or to fund a single property investment will be exempt from the ban.

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