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The promotion of speculative mini-bonds to retail consumers

November 26, 2019

What is happening in relation to mini-bonds?

The FCA has announced it will shortly ban the mass marketing of “speculative” mini-bonds to retail customers. It is introducing the restriction without consultation, using its product intervention powers. The restriction will come into force on the 1st January 2020 and it will last for 12 months while the FCA consults on making permanent rules that are expected to have the same effect as this intervention.

The term mini-bond refers to a range of investments. The ban announced will apply to more complex and opaque arrangements where the funds raised are used to lend to a third party, are invested in other companies or are used to purchase or develop properties. There are various exemptions, including unlisted securities used by companies to buy or construct property to be used for their own commercial or industrial purposes.

Why is it happening?

The FCA has limited powers over the, usually unauthorised, issuers of speculative mini-bonds but can take action when an authorised firm approves or communicates a financial promotion, or directly advises on or sells, these products.

Over the last year, the FCA has undertaken an extensive programme of work to tackle the risks for investors from mini-bonds, reflecting the risk of consumer harm. This consumer 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 that they do even though they do not have that status.

The FCA ban will mean that unlisted speculative mini-bonds can only be promoted to investors who firms know are sophisticated or high net worth. Marketing material produced or approved by an authorised firm will also have to include a specific risk warning and must disclose any costs or payments to third parties that are deducted from the money raised from investors.

Firms which approve financial promotions are already required to ensure that those promotions comply with FCA rules. The FCA has also published guidance on the requirements on firms when approving the financial promotions of unauthorised persons. The FCA believes that many promotions still fall short of existing requirements and that firms which approve the financial promotions of unauthorised persons may not be taking adequate steps to ensure that they comply with the rules before approving them.

We can help

In the meantime – with time potentially in very short supply – if you’d like immediate practical assistance with the processes of identifying whether your mini-bonds are in scope of this ban, approving financial promotions or seeking high net worth or sophisticated investor certifications, Thistle’s expert team can help.

To find out more, email us on or call us on 0207 436 0630.