Financial watchdog warns savers could lose everything in high-risk online adverts
Vicky Shaw
Thu, 20 August 2026 at 4:49 pm GMT+5:30
3 min read
Online promotions offering high returns may look simple and safe but carry the risk of leaving people with complete financial losses, the City watchdog has warned
The Financial Conduct Authority (FCA) highlighted the risks of investing in loan notes and mini-bonds offered by unregulated firms, following ongoing reports of consumers losing money
Such investment schemes typically involve individuals lending capital to a business for a fixed period in exchange for interest. Should the issuing enterprise collapse, buyers face losing every penny, the regulator said
Investors in mini-bonds or loan notes are unlikely to be able to refer grievances to the Financial Ombudsman Service or claim for losses through the Financial Services Compensation Scheme if something goes wrong, unless they dealt with an authorised person and the complaint relates to a regulated activity, the FCA stated
The FCA formally banned the marketing of speculative illiquid securities, including mini-bonds and loan notes, to retail investors from January 1, 2021
However, members of the public may still encounter promotions for loan notes and mini-bonds in everyday digital locations, such as social media, online adverts, or websites advertising high fixed returns
While such adverts can appear straightforward and safe, key warning signs include pressure to act quickly, unclear explanations of how money could be lost, or claims that an investment is “asset-backed” without clear evidence of what stands behind it, the regulator said
The FCA warned firms may be promoting high-risk investments without the permission they need
People may also be encouraged to certify themselves as experienced or wealthy investors to enable investments to be promoted to them
The regulator said there may be unclear fees or hidden conflicts, where those selling the investment may benefit themselves from consumers investing
Lucy Castledine, director of consumer investments at the FCA, said: “Big, fixed returns are a warning sign, not a guarantee
“Loan notes, mini-bonds and other speculative illiquid securities are high-risk investments and are not suitable for most people
“Ordinary retail investors should only invest through regulated firms because if they invest through an unauthorised firm, they may have little or no protection if things go wrong
“We are working hard to prevent harm, but consumers should still stop and check before investing.”
The FCA is encouraging anyone involved in distributing or funding high-risk investments to report anything suspect
