UK FCA issues statement concerning high-risk investments from unregulated firms

The UK Financial Conduct Authority (FCA) has issued a statement highlighting the growing concern over high-risk investment schemes promoted by unregulated firms. The FCA notes that these schemes, which often involve unlisted loan notes or mini-bonds used to fund property developments, may be marketed to investors through enticing websites, marketing campaigns and social media influencer promotions. Many of these firms operate outside the FCA's regulatory remit due to legal exemptions, meaning investors may not have access to the UK Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong. The FCA emphasises that such investments are generally suitable only for experienced or self-certified "sophisticated investors" under strict criteria and urges individuals to verify a firm's regulatory status using its register, before investing. The statement also includes a section of "top tips to investors" which includes, among others, advising caution around promised high returns, encouraging diversification of investments and recommending limited exposure to high-risk investments to no more than 10% of an investment portfolio.

Return to main website.