The UK’s top financial markets regulator has announced that it plans to make the ban on marketing of mini-bonds that it introduced in January permanent.
The Financial Conduct Authority (FCA) has unveiled new proposals to make its ban on the mass-marketing of speculative illiquid securities, including speculative mini-bonds, to retail investors permanent.
The FCA introduced the ban without consultation in January following concerns that speculative mini-bonds were being promoted to retail investors who neither understood the risks involved, nor could afford the potential financial losses.
In introducing the rules permanently, the FCA is proposing a small number of changes and clarifications to the ban introduced in January. This includes bringing listed bonds with similar features to speculative illiquid securities and which are not regularly traded within the scope of the ban.
“We know that investing in these types of products can lead to unexpected and significant loses for investors,” said Sheldon Mills, interim executive director of strategy and competition at the FCA. “We have already taken a wide range of action in order to protect consumers and by making the ban permanent we aim to prevent people investing in complex, high risk products which are often designed to be hard to understand.
“Since we introduced the marketing ban we have seen evidence that firms are promoting other types of bonds which are not regularly traded to retail investors. We are very concerned about this and so we have proposed extending the scope of the ban.”
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