High risk mini bonds still being promoted

Investors are still being exposed to adverts for mini-bonds on Google, despite a one-year ban taking effect from the start of 2019. Reports over the weekend cited a number of examples of mini-bonds at the top of an online search for certain terms, such as “high-return investments” or “top Isa rates”. This goes against the spirit of new rules that came into effect at the start of the year, which banned the marketing of mini-bonds to retail investors for one year.

During this period the regulator will consider making the ban permanent. Ahead of the ban, in an interview with Reuters in late November, Andrew Bailey, chief executive of the Financial Conduct Authority, who will take on the role of governor of the Bank of England, called on internet firms including Google to help it stop mini-bonds being promoted to retail investors. Mini-bonds have come under increased scrutiny, following several high-profile scandals.

One of the most prominent cases has been London Capital & Finance, which left almost 12,000 pensioners and first-time investors out of pocket following its collapse. Mini bonds are targeted at small investors, and they can be bought from as little as £1,000. The far larger corporate bond market is dominated by institutions and comes with much higher minimum investment requirements.

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