Rogue mini-bond salesmen ‘are playing down the risks’

Rogue salesmen are overstating the safety of high-risk “minibond” investments, Telegraph Money has found. Mini-bonds are unregulated assets that allow companies to raise money directly from individual investors. Some offer interest rates of more than 10pc, implying very high levels of risk.

Telegraph Money has found salesmen playing down the risk and even suggesting that the bonds are protected by the Financial Services Compensation Scheme (FSCS). The FSCS pays out on savers’ deposits if a bank fails, but does not cover corporate bonds.

Telegraph Money approached a number of mini-bond firms. One website, Green Energy Invest, promises returns of up to 11.6pc. It also claims that investments are covered up to £85,000 by the FSCS.

We were contacted by a firm called Averren Energy, which says it raises money to build wind and solar farms across the world. An Averren salesman, Stewart McArdle, told a reporter that his cash would be covered by his bank via the FSCS. When Telegraph Money confronted Averren, a spokesman admitted that this was not true and said Mr McArdle had been removed from operations.

The following day, another reporter who inquired via Green Energy was contacted by Mr McArdle, who said the return was “guaranteed”. The spokesman apologised and said he could confirm that Mr McArdle had been removed. “You have made it apparent that Mr McArdle has been using blurred terminology to allow potential clients to take it upon themselves to decide that the bond is FSCS related, and this is not acceptable,” he added.

Averren said that it had reduced risk via an “asset-backed structure” and that “we believe our offering is relatively well structured in terms of potential for return as well as risk mitigation”.

The spokesman said Green Energy Invest was merely an “introducer” to Averren and other firms. He said he would speak to the website

11.5% The interest rate offered by one mini-bond website, which also promised FSCS protection