{"id":19854,"date":"2019-12-12T10:54:57","date_gmt":"2019-12-12T10:54:57","guid":{"rendered":"https:\/\/smh.group\/?p=19854"},"modified":"2023-02-15T13:19:50","modified_gmt":"2023-02-15T13:19:50","slug":"calling-a-halt-on-mini-bonds","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/calling-a-halt-on-mini-bonds\/","title":{"rendered":"Calling a halt on mini-bonds"},"content":{"rendered":"\n

The Financial Conduct Authority has announced a\ntemporary ban on the promotion of most \u2018mini-bonds\u2019. <\/strong><\/p>\n\n\n\n

Have you ever been tempted by\nthose advertisements offering 8%+ yields on property-backed bonds? <\/p>\n\n\n\n

If you have, then you\u2019ve\nprobably been looking at a promotion for \u2018mini-bonds\u2019. These investments are\nnot always what they seem and have already resulted in losses for investors,\nnotably in the case of the failure of London Capital Finance (LCF) at the start\nof 2019.  <\/p>\n\n\n\n

There is no legal definition of what constitutes a \u2018mini-bond\u2019, but generally it is a fixed term bond<\/a><\/span><\/strong> that cannot be traded on the stock market and is typically issued by a small, unquoted company. As securities, rather than deposits, mini-bonds are not covered by the \u00a385,000 depositor protection given by Financial Services Compensation Scheme (FSCS). <\/p>\n\n\n\n

At the end of November 2019,\nthe Financial Conduct Authority (FCA) announced that it would be banning the\npromotion of most new mini-bonds to all but high net worth and sophisticated\ninvestors from the start of 2020. Many thought the FCA\u2019s move was overdue, as\nthere have been other failures since LCF. <\/p>\n\n\n\n

A lesson from the whole sad\nmini-bond saga is that unadvised investors can end up taking risks which are\nnot sufficiently explained and\/or which they do not fully understand. Many of\nthe mini-bonds appeared to have some form of property backing, but the\nexistence of a reference to bricks and mortar is no guarantee of capital\nsecurity. Investors should be particularly wary if the property involved is a\nspeculative development.  <\/p>\n\n\n\n

The high interest rates on\noffer ought to be a warning of potential dangers. At a time when bank base\nrates were under 1%, red lights should have been flashing at interest rates\nover 7% higher for \u2018secured\u2019 loans. Remembering the adage that \u201cIf it looks too\ngood to be true, it probably is\u201d, could have saved some mini-bond investors\nfive-figure losses.<\/p>\n\n\n\n

Next time you come across an investment that quotes returns well above normal market rates, think twice before going any further. And if you decide you are still interested, take independent financial advice<\/a><\/span><\/strong> before parting with your money. That way you are firmly within the FCA\u2019s regulatory remit and associated compensation schemes. <\/p>\n\n\n\n

To discuss your personal investment strategy<\/a><\/span><\/strong> with on of our Chartered Financial Planners<\/a><\/span><\/strong>, contact us on 0114 266 4432<\/strong> or info@smhca.co.uk<\/a><\/span><\/strong><\/p>\n\n\n\n

The value of your\ninvestment can go down as well as up and you may not get back the full amount\nyou invested. Past performance is not a reliable indicator of future\nperformance.<\/em> <\/em> Investing in shares should be regarded as a\nlong-term investment and should fit in with your overall attitude to risk and\nfinancial circumstances.<\/em><\/strong><\/h6>\n","protected":false},"excerpt":{"rendered":"

The Financial Conduct Authority has announced a temporary ban on the promotion of most \u2018mini-bonds\u2019. <\/p>\n","protected":false},"author":4,"featured_media":16648,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[98,429,77,430,428,97,427,386,25],"class_list":["post-19854","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-financial-advice","tag-financial-conduct-authority","tag-financial-planning","tag-independent-financial-advice","tag-investment-bonds","tag-investments","tag-mini-bonds","tag-personal-investment-strategy","tag-property"],"acf":[],"yoast_head":"\nCalling a halt on mini-bonds - SMH Group<\/title>\n<meta name=\"description\" content=\"The Financial Conduct Authority has announced a temporary ban on the promotion of most \u2018mini-bonds\u2019.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Calling a halt on mini-bonds - 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