Fraud prevention professionals are being urged to remain alert to the promotion of high-risk investments, as the Financial Conduct Authority (FCA) warns consumers continue to lose money through unregulated loan notes and mini-bonds.
The regulator says the recent failure of litigation funder Woodville Consultants Ltd, which raised money from retail investors through unregulated loan notes, illustrates the potential consequences. Investors in such products effectively lend money to a company in return for interest, but can lose their entire investment if the business fails.
The FCA permanently banned the marketing of speculative illiquid securities, including speculative mini-bonds and loan notes, to retail investors from January 2021. However, consumers continue to encounter promotions through social media, online advertising and websites promising high fixed returns.
The regulator highlighted several practices that should raise concerns for fraud and compliance teams. These include unregulated introducers directing consumers towards high-risk investments while taking substantial commissions; encouraging individuals to self-certify as experienced or wealthy investors; firms promoting investments without the necessary permissions; and unclear fees or conflicts of interest.
The FCA has also identified attempts to give investments a misleading appearance of legitimacy through associations with overseas exchanges or FCA-regulated businesses involved in administration. Some operators are also using trust structures and other arrangements in attempts to remain outside FCA rules.
Lucy Castledine, Director of Consumer Investments at the FCA, said: “Big, fixed returns are a warning sign, not a guarantee.”
The regulator is encouraging organisations involved in distributing or funding high-risk investments – including banks, payment providers, lawyers, accountants and auditors – to report suspicious activity.
More than 1,200 warnings have been issued by the FCA so far in 2026, alongside interventions to stop unlawful promotions and referrals to law enforcement agencies.
However, the regulator warned that increasingly complex, fast-moving and overseas-based scams can be difficult to disrupt, making collaboration between regulated firms, payment providers, government, regulators and law enforcement particularly important.
Consumers investing through unauthorised firms may have little or no recourse if something goes wrong, with many mini-bond and loan note investments falling outside Financial Ombudsman Service and Financial Services Compensation Scheme protections.
The warning underlines the importance of identifying suspicious payment flows, misleading financial promotions and networks of introducers before consumer losses occur.
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