Which? responds to FCA ban on mass-marketing of mini-bonds

Gareth Shaw, Head of Money at Which?, said:

“Savers have been put at risk of losing their life savings by misleading adverts for high-risk investments for too long, so this strong action from the regulator banning the mass marketing of these products is positive.

“Until it comes into effect, savers should approach these adverts with caution, as if the returns look too good to be true, they probably are. Any adverts promoting high-risk investments with guaranteed returns after the ban is in place should be avoided, as these will almost certainly be scams.

“The FCA must ensure all financial firms promoting these products comply with the ban, and the next government must put more responsibility on online platforms to prevent fraudulent adverts appearing on their sites.”

Notes to editors:

  1. Which? finds dubious marketing practices risk misleading savers over high-risk investments – 7th October 2019

  2. Four things savers should watch out for:

    • Question high interest rates and ‘guaranteed’ returns: the best fixed-term savings accounts currently pay less than 3% AER. Any account offering a higher rate of interest is likely to be a riskier investment product – with the exception of a few regular savers and high-interest current accounts that only pay interest on a small amount of money.

    • Check the FCA register: if a financial firm claims it is registered, check it against the FCA register, and look at which regulatory permissions it has. While FCA regulation doesn’t guarantee the products offered are regulated, it does mean that the company has to follow FCA rules, and you can complain to the Financial Ombudsman Service (FOS) if it doesn’t.

    • Question the FSCS protection: if it’s not clear whether a product has FSCS protection, you should ask the company directly and keep a record of its answer. If the company won’t confirm,  think twice about entrusting the company with your money.

    • Take independent financial advice: some unregulated firms are legitimate, but some may be scams. A financial adviser will be able to help you avoid these – and you’ll have recourse for complaint if anything goes wrong.