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FCA bans sale of 'speculative' mini-bonds to retail investors

Today the FCA have confirmed a ban against promoting 'speculative mini-bonds' to retail consumers, unless they are considered sophisticated or have a high net worth.

There is no legal definition of a 'mini-bond', but the term usually refers to illiquid debt securities marketed to retail investors.  These investments can be high risk because they are usually issued by small or start-up companies, or those that find it difficult to raise funds from institutional investors.  They usually do not have a secondary market so can't be sold on.  Investors are usually locked in until the bond matures, and could experience delays in interest payments or a complete loss of capital where the issuing company is unable to make repayments due to cashflow problems or company failure.

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