Reed Smith Client Alerts

The Financial Conduct Authority (FCA) has announced a ban on the marketing of certain speculative mini-bonds to retail investors. The press release can be found at, and the FCA’s temporary intervention measures can be downloaded as a pdf from

Authors: David Calligan


This ban is the FCA’s reaction to a spate of failures by mini-bond issuers, including the notorious failure at London Capital and Finance earlier this year.

Common features of the speculative mini-bond which concern the regulators include:

  • The issuer is typically an unauthorised person offering a high fixed rate of interest (8 per cent or more),
  • Investors are committed to invest for a period of time (three to five years) with no opportunity to sell or transfer the speculative mini-bond during that period,
  • The issuer uses capital raised from retail investors to fund speculative and high-risk activities, and
  • Investors are subject to high costs or third-party payments made from the proceeds of the bond issuance.

The FCA’s examination of practices in the mini-bond market has led to the imposition of these temporary measures, in part due to the significant risk of immediate consumer harm. This harm is rooted in the marketing of mini-bonds, which does not satisfy the requirement in COBS 4.2 that promotions should be clear, fair, and not misleading. The FCA has found that the average amount invested in mini-bonds is £25,000 per investor, so there is a potential significant negative impact on individual investors.