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FCA to make ban on mini-bond marketing permanent

by LLB Editor

Britain’s financial watchdog said this morning that it would make permanent its ban on the mass marketing of speculative mini-bonds and other illiquid securities to retail investors.

The Financial Conduct Authority introduced the ban without consultation in January due to concerns that speculative mini-bonds were being promoted to retail investors who neither understood the risks involved, nor could afford the potential financial losses.

The FCA is extending the ban to include listed bonds with similar features to speculative illiquid securities and which are not regularly traded.

Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “We know that investing in these types of products can lead to unexpected and significant loses for investors. We have already taken a wide range of action in order to protect consumers and by making the ban permanent we aim to prevent people investing in complex, high risk products which are often designed to be hard to understand.

“Since we introduced the marketing ban we have seen evidence that firms are promoting other types of bonds which are not regularly traded to retail investors. We are very concerned about this and so we have proposed extending the scope of the ban.”

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