The UK Financial Conduct Authority (FCA) issued a warning on 20 August 2026 about the risks of investing in loan notes and mini-bonds from unregulated companies. The regulator cautioned that these products typically promise a return of principal plus interest, but if the issuing firm fails, investors can lose all of their money.
The warning forms part of a broader consumer protection campaign against high-risk investments promoted through social media and online platforms. The FCA stressed that retail participation in such securities was permanently banned in 2021. Before the ban, some securities crowdfunding platforms offered mini-bonds; the restaurant chain Chilango infamously issued a burrito bond that raised more than £5 million before eventually going bust. It remains unclear how much investors recovered.
Unlike listed corporate bonds, mini-bonds typically have limited liquidity, less regulation and transparency, and are issued by smaller private firms. They are also generally not covered by the Financial Services Compensation Scheme (FSCS) if the company fails. Reports indicate that at least 25 mini-bond issuers collapsed between 2018 and 2021. Lucy Castledine, director of consumer investments at the FCA, said: Big, fixed returns are a warning sign, not a guarantee. She urged investors to invest only through regulated platforms.
