Lost money in a mini-bond or loan note? What you can (and can't) claim back

The FCA renewed its warning on 20 August 2026 about unregulated mini-bonds and loan notes, pointing to the recent failure of litigation funder Woodville Consultants Ltd. If you've already put money into one of these products, the uncomfortable fact is that most investors have no automatic route to the Financial Ombudsman Service or the Financial Services Compensation Scheme - but there are still things worth checking and doing.

Key takeaways

• A mini-bond or loan note means lending money to a company for a fixed term in return for interest. If the company fails, you can lose your entire investment.
• The FCA banned marketing these products widely to ordinary retail investors from 1 January 2021 - but unregulated firms still promote them using exemptions, including asking investors to self-certify as "sophisticated" or "high-net-worth".
• Woodville Consultants Ltd, an unregulated litigation funder, raised money through loan notes and has now failed. Joint administrators from Kroll Advisory were appointed on 16 July 2026.
• Most mini-bond and loan note investors are unlikely to be able to claim through the Financial Ombudsman Service or Financial Services Compensation Scheme, unless an FCA-authorised firm was involved in how the investment was sold.
• Before investing in anything like this, check the firm on the FCA Firm Checker or Financial Services Register. After the fact, that same check tells you whether you have any regulatory protection at all.
• The FCA has issued more than 1,200 warnings about high-risk investments so far this year - this is not a one-off.

What are mini-bonds and loan notes?

A mini-bond or loan note is, in the FCA's words, an arrangement where you "lend money to a company for a set period in return for interest" - or you buy a loan someone else already made to that company. If the company can pay the interest and return your capital at the end of the term, you get a fixed return. If it fails, you can lose everything, because these are usually unsecured debts with no protection behind them.

The FCA permanently banned the marketing of speculative illiquid securities, including mini-bonds and loan notes, to ordinary retail investors from 1 January 2021. That ban is why you don't see these products advertised on the high street - but it hasn't stopped them appearing on social media, in online adverts, or on websites promising high fixed returns, often using legal exemptions to reach investors anyway.

Why do these adverts still reach people?

The FCA lists several patterns it sees repeatedly:

• Unregulated introducer firms passing investors to unregulated companies, taking a fee or commission that reduces the initial investment before it's even made
• Investors encouraged to self-certify as "experienced" or "high-net-worth", which can unlock legal exemptions to the marketing ban - most people don't actually meet the criteria
• Firms promoting high-risk investments without the FCA permission they need to do so
• Unclear fees, or hidden conflicts where the seller benefits when you invest
• False "halo" associations - implying legitimacy through an overseas listing, or by naming an FCA-regulated firm involved somewhere in the wider structure
• Trust structures or other arrangements used to try to sit outside FCA rules

Other warning signs worth treating as a hard stop: pressure to act quickly, vague explanations of how you could lose money, or a claim that the investment is "asset-backed" without clear evidence of what actually stands behind it.

Am I covered by the Financial Ombudsman Service or FSCS?

This is the part most investors get wrong, and it's worth being direct about it: usually not.

Both the Financial Ombudsman Service and the Financial Services Compensation Scheme generally only step in where an FCA-authorised firm was involved in a regulated activity. The FCA's own guidance says plainly that investors in mini-bonds or loan notes are "unlikely" to be able to refer complaints to the Ombudsman or claim through FSCS, unless they dealt with an authorised person and the complaint relates to a regulated activity.

That word "unless" matters. Check for an authorised firm anywhere in the chain:

• Did an FCA-authorised financial adviser recommend the investment to you? Advice on investments is itself a regulated activity, even where the underlying product isn't.
• Did an FCA-authorised platform or broker arrange or facilitate the deal, rather than just introducing you to the issuer?
• Was there an FCA-authorised security trustee genuinely involved - not just named as a marketing point, but actually holding security for you? (The FCA specifically warns that "FCA-authorised security trustee" claims are sometimes used to sound reassuring without meaning much in practice.)

If any of these apply, you may have a complaint route against the authorised firm for how the investment was sold or advised on - a mis-selling complaint is different from a claim against the failed issuer itself, and it can proceed even where the underlying investment has no cover.

What happened with Woodville Consultants?

Woodville Consultants Ltd was a litigation funder that raised capital from retail investors through unregulated loan notes. The FCA cited its failure as a current example of the harm these products can cause. Robert Goodhew and Andrew Stoneman of Kroll Advisory were appointed joint administrators on 16 July 2026. If you invested through Woodville, the administrators are the right first point of contact:

• Email: [email protected]

Being an unsecured creditor in an administration is a different position from being covered by FSCS or the Ombudsman - your claim is registered against whatever assets remain, and how much (if anything) you recover depends on what the administration can realise. It's still worth registering your claim, even against an uncertain payout, because unregistered claims generally can't be paid.

Which situation are you in?

What evidence helps

• The promotional material you were shown - website pages, brochures, emails, or social posts, especially anything claiming high fixed returns or "asset-backed" security
• Confirmation of who you dealt with: the issuer, any introducer, and any adviser or platform in between
• Records of what you paid: bank statements, transfer confirmations, contract notes
• Any documents you signed, including a sophisticated or high-net-worth investor declaration, if you were asked to sign one
• Correspondence with the firm, administrators, or liquidators about the investment or its failure

How to structure a complaint or claim

If an authorised firm was involved in selling or advising on the investment, put your complaint to that firm in writing: what you were told, what you invested, and what went wrong. If the firm behind the investment itself has failed, your claim goes to the administrators or liquidators instead, following whatever process they set out - keep it factual and attach your evidence rather than describing it.

When and how to escalate

If you've complained to an authorised firm about how the investment was sold and you disagree with its final response - or eight weeks pass without one - you can take that complaint to the Financial Ombudsman Service, which is free. If there's no authorised firm to complain to, the Ombudsman and FSCS generally won't be able to help, and your route runs through the administration or liquidation process, and through reporting the firm to the FCA so it can act against anyone still promoting unlawfully.

You do not need to pay anyone to check a firm's status, report a scam, or register a creditor claim - all of that is free to do yourself.

Sources: FCA, Consumers warned to beware of risky mini-bonds and loan notes (Last checked: 20.08.2026); FCA, Unregulated loan notes and mini-bonds: don't risk your savings on promises of high returns (Last checked: 20.08.2026); FCA, How to claim compensation if a firm fails (Last checked: 20.08.2026); FSCS, What we cover - investments (Last checked: 20.08.2026); Financial Ombudsman Service, Investment complaints (Last checked: 20.08.2026).

Not the first firm this has happened to

Firms failing while holding customer money isn't rare - HeyRefund has covered several recent examples, including Prosper Capital LLP's liquidation and the Crowd2Let FSCS claim process, where FSCS cover did apply because an authorised firm was involved, and Blue Motor Finance Limited entering administration, which walks through registering a claim with administrators. If you were pressured into an investment or approached out of the blue, our guide on bank refusing to refund a scam payment covers a related set of escalation routes when money has already left your account. And if the sales conversation touched on a pension transfer, see our guide to pension and investment transfer delays.

Watch for follow-on scams

The FCA warns that fraudsters often target people who've already lost money in a failed investment, offering to "help" recover it for an upfront fee, or posing as a regulator or law firm. Verify anyone who contacts you unexpectedly about a recovery, and report suspicious approaches to the FCA using its scam reporting service.

How HeyRefund can help

Working out whether you have any protection at all - and building the paper trail to use it - is the hard part here, not the paperwork itself. HeyRefund helps you organise what you were shown, what you paid, and who was involved, into a clear file for administrators, an authorised firm's complaints team, or the Financial Ombudsman Service.

Everything above you can do yourself for free. HeyRefund just makes the file easier to build and harder to get stuck on.