The structure that took £237 million off eleven and a half thousand people.
A mini-bond is a debt security issued by a company, usually unlisted, usually illiquid, usually unprotected. They are the reason the FCA introduced a permanent ban on mass-marketing speculative illiquid securities to retail investors, and they are on this site as a warning rather than as a product.
Capital would be at risk, and nothing here is an offer
Nothing on this page is an offer, an invitation to invest, or a financial promotion. Community shares, bonds and insurance are regulated products: capital would be at risk, they are not covered by the Financial Services Compensation Scheme, and none of them is available anywhere in this build. Any real version would require an authorised firm, approved promotions under section 21 of FSMA 2000, and documentation nobody generates from a website.
What a mini-bond actually is.
A loan to a company, dressed as a product. You give a business money, it promises a fixed return over a fixed term, and at the end it promises to give the money back.
There is no market to sell it in, so you cannot get out early. There is usually no security over any asset, so if the company fails you are an unsecured creditor behind everybody else. There is no FSCS protection, because lending money to a company is not a protected activity.
And the return offered is high — seven, eight, sometimes twelve per cent — for a reason that everybody understands in the abstract and nobody applies in the moment: because the risk is high.
London Capital & Finance, in six lines.
| What | Detail |
|---|---|
| What it sold | Fixed-rate mini-bonds, marketed as ISA-eligible and low risk |
| Who bought them | Around 11,600 bondholders, many of them retail savers |
| How much | About £237 million |
| What happened | The firm collapsed into administration in January 2019 |
| What followed | An independent investigation into the FCA’s handling of it, a government compensation scheme, and a permanent ban on the mass-marketing of speculative illiquid securities to retail investors |
| The lesson | The marketing was regulated. The bonds themselves were not. Almost nobody buying them understood the difference |
And the specific thing that made it worse.
The bonds were promoted as being eligible for an ISA. That single word did more work than any other in the marketing, because people understand an ISA as a safe place to put savings.
The wrapper says nothing about the risk of what is inside it. An ISA is a tax treatment, not a protection, and a catastrophic investment inside an ISA is a catastrophic investment with a favourable tax outcome on a loss.
That is the pattern to watch for in every version of this: a familiar, reassuring word doing the work that the risk disclosure should be doing.
What this page is, and is very deliberately not.
On this page
- A description of the structure, and what it is for
- The failure case, named, with the numbers
- The rule change that followed it
- A plain statement that capital is at risk and there is no FSCS cover
Not on this page, ever
- Any offer, invitation or promotion of any bond
- Any suggestion that this estate is issuing one
- Any revenue-share arrangement, on any basis
- Any product on this site that pays a cash return of any kind
Could a farm do this honestly?
A revenue-share bond over, say, a share of brewery turnover is not inherently dishonest. Some of them have worked. The problem is that the honest version and the disastrous version look identical in the marketing, and the person buying cannot tell them apart.
The honest version requires an authorised firm approving the financial promotion under section 21 of FSMA, a proper risk warning, an appropriateness assessment, and marketing restricted to the categories of investor the rules permit. By the time all of that is in place it is not a website feature; it is a capital raise.
The dishonest version requires a nice photograph of a field and an interest rate. Which is why this page exists in the form it does.
The structure that actually works.
Community shares, one member one vote, and a survival record.
