FCA permanently bans promotion of mini-bonds to retail investors
What has happened?
The FCA announced in June 2020, proposals to make permanent its ban on the mass marketing of speculative illiquid securities, including speculative mini-bonds, to ordinary retail investors.
The FCA introduced the ban without consultation in January 2020 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. It aims to publish a Policy Statement before the end of 2020 and it intends that the rules making the ban permanent will begin on 1 January 2021.
What do you need to do?
In introducing the ban permanently, the FCA is proposing a small number of changes and clarifications to the initial ban introduced in January. This includes bringing into scope listed bonds with similar features to speculative illiquid securities and which are not regularly traded.
There are various exemptions including for listed bonds which are regularly traded, companies which raise funds for their own commercial or industrial activities, and products which fund a single UK income-generating property investment.
The FCA ban will mean that products caught by the rules can only be promoted to retail investors that firms know (and can demonstrate) are sophisticated or high net worth. Marketing material produced or approved by an authorised firm will also have to include a specific risk warning and disclose any costs or payments to third parties that are deducted from the money raised from investors.
How can we help you?
If you’d like to know more about financial promotions for mini-bonds or any other type of product, or for any other aspect of FCA compliance, our expert team is here to help. Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.