FCA warns about risks of mini bonds and promissory notes from unregulated firms

The Financial Conduct Authority (FCA) of the United Kingdom has issued an intensified warning regarding the risks associated with investments in mini bonds and promissory notes issued by unregulated companies. The recent collapse of Woodville Consultants Ltd, a litigation funder that raised money from retail investors through unregulated promissory notes, shows that these instruments can lead consumers to lose their entire investment.

What are mini bonds and promissory notes, and why are they risky?

A mini bond or promissory note involves lending money to a company for a fixed term in exchange for a fixed interest rate. However, if the issuing company becomes insolvent, investors may lose all of their capital. Since January 1, 2021, the FCA has permanently banned the marketing of illiquid speculative securities (including mini bonds and promissory notes) to retail investors. This decision was made following repeated losses among consumers and linked bad practices.

The persistence of promotion despite the ban

Despite the ban, it is still common to find advertisements for mini bonds and promissory notes on social media, digital ads, or websites promising high fixed returns. These advertisements may seem simple and safe, but they often include warning signs such as:

• Pressure to invest quickly.
• Vague explanations about potential losses.
• Claims of asset backing without clear proof.

The FCA documents that unregulated introducing firms are directing consumers to high-risk investment issuing companies, charging high commissions or fees that reduce the initial invested amount.

Problematic practices and fraud signs in mini bonds and promissory notes

Additionally, the FCA detects strategies where consumers are encouraged to self-declare as sophisticated or wealthy investors, which allows these investments to be promoted to them after bypassing regulatory controls. Other identified practices include:

• Promotion of high-risk investments by companies without the corresponding authorization.
• Non-transparent fees or conflicts of interest, where the individual selling the investment benefits from the invested capital.
• Use of trust structures and legal mechanisms to evade oversight.
• Employment of "halo" associations to appear legitimate, for example, listings on foreign exchanges or involvement of regulated entities only in various administrative functions.

“High and fixed returns are a warning sign, not a guarantee. Mini bonds, promissory notes, and other illiquid speculative securities are highly risky and unsuitable for most investors,” stated Lucy Castledine, Consumer Investments Director at the FCA.

Consumer protection and regulatory uncertainty

The FCA stresses that retail investors should only make investments through regulated firms, as investing through unlicensed companies means being unprotected if something goes wrong. In practice:

• Those affected by mini bonds and promissory notes outside the FCA's control will likely find it difficult to resort to the Financial Ombudsman Service or the Financial Services Compensation Scheme, unless they have dealt with an authorized person and the complaint relates to a regulated activity.
• Since January 2026, a new regime regulating public offerings of securities is in effect, although exemptions remain that allow the promotion of certain high-risk products outside the scope of oversight, as highlighted by the FCA in its Perimeter Report.

Supervisory response and recommendations for the industry

The FCA reports that so far this year, it has issued over 1,200 warnings, instructed the cessation of illegal promotions, and referred files to law enforcement for potential further action. However, it acknowledges that scams can be complex, rapidly evolving, and operating from overseas, complicating the response. To combat this scenario, it highlights the need for continued cooperation among regulated firms, banks, payment providers, regulators, and authorities.

The regulator urges distributors and funders of high-risk investments — including banks, legal firms, accountants, and auditors involved in the chain — to report any suspicious activity. It also recommends consumers use tools like the “FCA Firm Checker” and report any dubious offers to the authority.

Woodville Consultants Ltd case: management and contact

The case of Woodville Consultants Limited has been particularly noted. Robert Goodhew and Andrew Stoneman from Kroll Advisory were appointed joint administrators of the firm on July 16, 2026. Inquiries relating to the process can be directed to [email protected].

Perspectives for payment operators, platforms, and the legal sector

Intermediaries and technology providers in the iGaming ecosystem need to consider that being involved — directly or indirectly — in the distribution of these products increases regulatory exposure. According to the FCA, even actors tangentially linked to the execution of payments may be affected if an investigation finds their participation in prohibited activities.

To stay informed about regulatory requirements and risks, monitoring updates in the regulation section is recommended for operators and providers in the sector.