Is the Treasury finally about to do something about scam mini-bonds (eg LC&F)?

Reaper

I just saw the Treasury has launched a consultation on what to do about unregulated mini-bonds, or non-transferable debt securities (NTDS) as they prefer to call them. These have cost unwary investors a great deal of money.

They are suggesting one of 3 options:
1) Get the FCA to regulate them all.
- YES! This is the right answer!
2) Make them give investors a a proper prospectus about the investment.
- Unlikely to help. As they point out the unsophisticated investors targeted won't understand them.
3) Leave the FCA to do whatever they feel like.
- NO! This is what is happening now and the FCA are not enforcing what few extra rules they have issued.

What's the betting they go for 3?

Brief summary:
https://www.scottishlegal.com/article/fraser-kane-hm-treasury-launches-consultation-on-regulation-of-mini-bonds
or the whole thing:
https://www.gov.uk/government/consultations/regulation-of-non-transferable-debt-securities-mini-bonds-a-consultation

maxsteam

The regulatory authorities seem to have acknowledged that they got it wrong with LC&F which is a step in the right direction. Too often authorities prefer to justify actions that, to right minded people, are inappropriate.

Malthusian

Akin to stopping future maritime disasters by banning ships from being called "Titanic".

If minibonds are banned / regulated but scammers are still free to market unregulated investment schemes to the public as long as they don't call them "minibonds", they will just choose different forms of investment scheme.

Minibonds are already yesterday's news.

Reaper

Malthusian said:

If minibonds are banned / regulated but scammers are still free to market unregulated investment schemes to the public as long as they don't call them "minibonds", they will just choose different forms of investment scheme.

All types of NTDS where the money used is invested elsewhere are covered, though as BondReview points out you are correct they can always get round it, eg “invest in our hotel room with an 8% assured return”.

BondReview also has a collection of sensible suggestions how regulation ought to work here eg No small business exemption on audited accounts for anyone taking investment money from the public.
[EDIT: Oops sorry, wrong link - here's the right one]
https://bondreview.co.uk/2019/04/24/the-lcf-scandal-was-preventable-here-are-3-things-we-can-do-to-stop-the-next-london-capital-finance/

The government consultation is not just for industry insiders. They are encouraging retail investors to take part too. So it might be worth sending in our views.