Issuing Your Own Bond Does Not Need FCA Authorisation
A company that raises money by issuing its own loan note or mini-bond directly is not, by that act alone, carrying out a regulated activity. This is the same legal position as a company selling its own shares, and it is entirely lawful for a small, genuine business to do. The fact that the issuer has no FCA reference number of its own is therefore not, on its own, a warning sign.
Promoting the Bond Is a Different Matter
Advertising or promoting a loan note to the public is a controlled activity. It generally needs either an authorised firm to approve the promotion under section 21 of the Financial Services and Markets Act, or the investor to be certified as high net worth or sophisticated. A loan note promoted with no named approver who can be checked has skipped a step the law requires, however sound the business behind it may be.
A Broker Arranging the Sale Is Not the Issuer
A third party who introduces investors to someone else's bond, rather than issuing its own, is arranging a regulated activity. That does need FCA authorisation, held either directly or as the appointed representative of an authorised firm. Where the money goes, and whose authorisation the person asking for it relies on, are two separate facts worth confirming independently.
Where the Payment Goes Matters Most
A genuine issuer's bank account is held in its own company name and can be confirmed through Confirmation of Payee. Failed mini-bond schemes often show a familiar pattern: a return well above the market rate, pressure to commit quickly and a payment destination that does not match the company being described. Whatever else appears to line up, this is the check that should never be skipped.
How MetaAshes Examines This
A MetaAshes assessment cross-references a firm's details against the official record in a single pass. For this question, the most relevant checks include:
- Firm Reference Number validity
- Loan note promotion approval
- Payee name verification
- Company existence and identity
Frequently Asked
If a loan note issuer has no FCA number, does that mean it is a fraud?
Not necessarily, because a company can lawfully issue its own bond without any FCA authorisation of its own. What should still be checked is whether the promotion was properly approved, whether the company genuinely exists and is active, and whether the payment destination matches that company exactly.
What is the most useful check before committing money?
A Confirmation of Payee check in the issuing company's exact name. If the account is held in a different name, or the check cannot confirm the company, do not pay until the difference has been explained.
This guide is provided for general information and does not constitute financial or legal advice.