FCA Urges Caution Over High-Risk Investments Such as Mini-Bonds and Loan Notes

The FCA is urging consumers to remain cautious when considering high-risk investments, including mini-bonds and loan notes, and to fully understand the risks before committing their money.

On 19 January 2026, the Public Offers and Admissions to Trading regime came into force, introducing new rules and standards governing when securities can be offered to the public. The regime is designed to strengthen market integrity and improve investor protection.

Securities are financial instruments that represent financial value and can be traded or invested in, such as shares, bonds and other investment products. The new regime applies to both transferable securities, like shares listed on a stock exchange, and non-transferable debt securities, including mini-bonds and loan notes.

Why Mini-Bonds and Loan Notes Are High Risk

Mini-bonds and loan notes are inherently high-risk investments. While higher-risk strategies may be suitable for some experienced investors, they are not appropriate for everyone. It is vital that investors fully understand the potential risks — including the possibility of losing some or all of their money.

Consumers should always check whether the firm offering an investment is authorised. If you invest with a firm that is not regulated by the FCA, you are likely to have far fewer protections if something goes wrong.

In many cases, this means you may not be able to complain to the Financial Ombudsman Service or claim compensation through the Financial Services Compensation Scheme, making it significantly harder to recover your money.

Misleading Promotions and Unrealistic Returns

The FCA has raised concerns about consumers being encouraged to invest in high-risk schemes without fully appreciating the dangers involved. Some promotions advertise returns that are far higher than mainstream investments, while downplaying — or even obscuring — the real risks.

We have also seen examples of firms overstating how safe investments are and understating the genuine risk of capital loss.

Who High-Risk Investments Are Suitable For

High-risk investments are only suitable for a small group of investors. These individuals fully understand both the risks and potential rewards and have the financial resilience to absorb losses without serious impact.

Even with new powers under the updated regime — including enhanced powers over unauthorised firms — the FCA’s ability to intervene will remain limited when firms operate outside regulation.

What to Consider Before You Invest

• Know who you’re dealing with: The firm promoting an investment may be different from the firm managing your money. Use the FCA Firm Checker to confirm whether all parties involved are authorised and permitted to offer investment services.
• Understand your rights: If a firm is not regulated, your options for help if something goes wrong will be severely limited, and you could lose all of your investment.
• Do your own research: Verify information using reliable sources and ensure you understand the full risks before investing. Resources such as InvestSmart can help improve your financial knowledge.
• Stay alert to scams: Be cautious of offers promising high or guaranteed returns. Scammers may hide risks in small print or present “reasonable” returns to appear legitimate.

Investors can check the FCA Warning List to identify firms and individuals operating without authorisation or linked to known scams.

If you believe you have lost money to an investment scam, contact Action Fraud and report the matter to the FCA. While the FCA cannot recover lost funds, every report helps protect other consumers from harm.