The Financial Conduct Authority (FCA) has confirmed its ban on mini-bond marketing, almost a year after the City regulator introduced a temporary ban on speculative illiquid securities.
The ban will come into effect on 1 January 2021, and will cover speculative mini bonds as well as listed bonds which have similar features.
“We’ve today confirmed our proposals to make the speculative mini-bond ban permanent and extend its scope,” said Sheldon Mills, interim executive director of strategy and competition at the FCA.
“These products are high risk and are often designed to be hard to understand.
“Consumers should always be wary of any investment promising high returns while downplaying risks.”
The FCA added that financial services firms need to do more to stamp out fraud and misleading adverts, and to bear clear legal liability for the financial promotions they highlight.
Earlier this year, peer-to-peer lenders expressed concern that the temporary ban on mini-bond marketing could lead to more mini-bond providers to operate without regulation – potentially creating a higher-risk environment for retail investors.
The FCA has been vocal in its commitment to protect consumers and improve the retail investment market.
A Call for Input on how to best serve retail investors is set to close on 15 December.
Read more: A timeline of FCA oversight and job changes