Bonds Advice

Risky minibonds still being touted to armchair investors post ban


Everyday investors continue to be exposed to adverts for risky minibonds despite a ban by the watchdog. The Financial Conduct Authority (FCA), the City regulator, announced in November that from Jan 1, the promotion of most minibonds to all but the most sophisticated investors would be outlawed.

Firms are now blocked from marketing bonds that involve investors’ money being lent to third parties, unless they can be sure they are highly experienced.

When Telegraph Money did a Google search on Thursday for terms including “fixed-rate bonds” and “high-return investments”, we found that some minibonds still appeared as promoted results – potentially in breach of the new rules.

After being contacted by this newspaper on Thursday, the FCA issued a warning about Investment Bridge – which offers renewable energy bonds and advertises on Google – saying it was unauthorised and could be running a scam. Telegraph Money tried without success to contact the firm, whose website does state that it is not regulated, without success.

So-called minibonds often offer returns three or four times higher than inflation, but are risky. They were thrust into the spotlight last year by the London Capital and Finance scandal, in which around 10,000 investors lost close to £236m. Many came across it after seeing adverts on social media or search engines.

Jenny Ross, of Which?, the consumer group, said: “Online platforms must do more to protect their users from potentially dodgy investments. If not, the Government must intervene to ensure that people are not misled by online adverts that promise unrealistic returns.”

Telegraph Money found three examples of firms promoting minibonds via Google, although it was unclear whether the offerings involved money being lent to third parties. Many firms offering minibonds are not FCA regulated.

Google said it meets the FCA’s rules and encourages it to flag adverts that could be in breach. A spokesman said it has financial services policies to help people make informed decisions.

“When ads breach our policy, we take appropriate action. We are working with regulators such as the FCA on further clarity in this area in order to protect consumers.”


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