Investors in mini-bonds or loan notes issued by firms that have since collapsed have a combined £1bn in capital at risk, according to analysis by The Times.
Several of the schemes selling these high-risk products – unlisted debt securities issued directly by companies – have failed since April last year, leaving debts of up to £990m, an average of about £141m per scheme.
Despite efforts by the FCA to crack down on mini-bond schemes after the £237m failure of London Capital & Finance (LCF) in 2019, which prompted the regulator to ban the marketing of mini-bonds to retail investors in 2021, there has been a rise in the sale of the products, according to The Times.
In August, the FCA issued a warning to consumers about the risks of investing in loan notes and mini-bonds issued by unregulated companies, after further reports of people losing money in the high-risk investments.
Five of the seven failed loan note schemes analysed by The Times have been accused by insolvency practitioners of being unlawful Ponzi scams, including 79th Group, a £200m property investment company which entered insolvency in April 2025 and is being investigated by City of London police for fraud; Woodville, a £299m litigation finance business accused of paying millions of pounds to related parties; and Godwin Capital, an alleged £175m scheme whose investors are expected to only recover about 5p for every £1 they invested.
Industry experts have warned several other active loan note businesses were showing signs of financial distress and it is estimated that investors have several billion pounds at risk in active and failed schemes, the Times reported.
The role of high street banks that have received hundreds of millions of pounds in undisclosed commission on behalf of the schemes is also being scrutinised by the FCA. An investigation by The Times found that 79th Group and Godwin Capital paid more than £100m in commission.
