Whack-a-bond

28 Nov 2019 By Dasha Afanasieva Follow @dasha_reuters

Britain’s financial regulator will ban the marketing of risky so-called minibonds to unsophisticated investors. The clampdown makes sense, but comes late, and may still leave loopholes. It highlights the limits of the FCA’s power, as well as the softness of its bark.

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The Financial Conduct Authority will ban the mass marketing of speculative minibonds to retail customers, the British regulator said on Nov. 26.

The ban will apply to arrangements where the funds raised are used to lend to a third party, invest in other companies or purchase or develop properties. There are exemptions such as listed minibonds, companies which raise funds for their own activities (other than the ones above) or to fund a single UK property investment.

The restriction will come into force on Jan. 1 and last for 12 months while the FCA consults on making permanent rules.

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