We do not promote ‘speculative mini bonds’

The FCA have announced a ban on the marketing of speculative mini bonds. We do not promote these types of bonds, but we welcome this ban as it will provide greater protection for investors against being misled by inappropriate marketing.

  • Blog

- 9 December 2019

When we launched the Triodos crowdfunding platform in 2018 we were delighted to be able to offer a new way for sustainable businesses to raise capital to grow their operations so that they can have, or continue to have, a positive impact on people and the planet. We were the first bank in the UK to launch its own crowdfunding platform - connecting investors directly with positive organisations seeking finance, and offering this through an Innovative Finance ISA (IFISA).

The media has widely reported on the Financial Conduct Authority (FCA) – recent (26 November 2019) ban on the marketing of ‘speculative mini bonds’ to retail investors. This has been put in place to address the risk of consumer harm from the promotion of these type of bonds.

The Triodos crowdfunding platform is regulated by the FCA (as part of Triodos Bank UK), however what we offer are not such ‘speculative mini bonds’ and so we are therefore unaffected by this marketing ban.

However, we very much welcome the FCA’s moves to restrict the sale of these types of complicated on-lending structures and believe they must effectively enforce existing rules around the promotion of investments to make the so-called P2P market safer for retail investor.

‘Speculative mini bonds’ are defined as bonds or preference shares where money is used to lend to third parties, invest in other companies or in speculative property development. The FCA specifically recognises the difference between these types of capital raises (by newly created companies for the purpose to on-lend), versus investment capital raised by real businesses to grow their own operations.

Alternative finance channels, such as triodoscrowdfunding.co.uk and peer to peer lending platforms have been critical to supporting SMEs in the UK. We’re legitimate, authorised investment crowdfunding platforms offering investments that are structured to be appropriate for retail investors. As the Cambridge Alternative Finance report stated, in 2017 alternative finance provided £4.2 billion of business funding to SMEs in the UK. It is a vital part of the finance ecosystem.

As with any investment, it is vital that investors do understand the risks, and we welcome the FCA’s proportionate approach to regulation and protecting customers from potential harm, especially these speculative investments that aren’t always as they appear.

We will continue to pride ourselves on our transparency - it’s embedded in our nature and in the essence of every product we offer. We clearly state the risks of investments that we promote so that our investors understand what they are investing in. The best interests of our customers and clients are always at the forefront of what we do, and they always will be.