The UK's regulator, the Financial Conduct Authority (FCA), has issued a warning over unregulated loan notes and mini-bonds following a series of failures that have left investors facing substantial losses.
The regulator said consumers continue to lose money through the high-risk investments, which typically involve lending money to a company for a fixed period in exchange for interest.
It said the recent failure of Woodville Consultants, which raised money from retail investors through unregulated loan notes, demonstrated the potential risks.
The FCA permanently banned the mass marketing of speculative illiquid securities, including mini-bonds and loan notes, to ordinary retail investors from January 2021.
However, unregulated firms can still seek to sell the investments using exemptions, including by asking individuals to certify themselves as sophisticated or high-net-worth investors.
The regulator said it continued to see unregulated introducers directing consumers towards high-risk investments, sometimes receiving substantial fees or commissions in the process.
It also warned of firms highlighting the involvement of FCA-regulated businesses, overseas stock exchange listings or trust structures in an attempt to give investments an appearance of greater legitimacy.
The warning follows a series of high-profile loan note failures involving UK and international investors.
In June 2025, administrators were appointed to four entities connected to Godwin Capital's loan note offerings. International Adviser previously reported that Godwin investments had been referred or sold through advisers across the UK, US, Middle East and Europe, with some products promising double-digit returns.
More recently, a £155m High Court freezing order was imposed in connection with Godwin Capital No.8 amid legal proceedings following its collapse. Administrators have brought claims against directors and associated companies, while investors were previously told that funds raised through the loan notes would be used for property developments and secured against assets.
The 79th Group has also faced scrutiny over its loan notes, with City of London Police launching an investigation last year into suspected fraud involving the property group, which offered investors fixed returns through loan notes.
Lucy Castledine, director of consumer investments at the FCA, said: “Loan notes, mini-bonds and other speculative illiquid securities are high-risk investments and are not suitable for most people.
“Ordinary retail investors should only invest through regulated firms because if they invest through an unauthorised firm, they may have little or no protection if things go wrong. We are working hard to prevent harm, but consumers should still stop and check before investing.”
The FCA said it has issued more than 1,200 warnings so far in 2026 and said tackling harm from unregulated investments would require continued cooperation between regulated firms, regulators, government and law enforcement.
