The FCA’s Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed.
What the FCA said
The warning follows the failure of Woodville Consultants Limited, a litigation funder that raised money from retail investors through unregulated loan notes. Robert Goodhew and Andrew Stoneman of Kroll Advisory were appointed joint administrators on 16 July 2026. A loan note or mini-bond is a loan to a company for a fixed period in return for interest. If the company fails, the investor can lose everything, and, as the FCA sets out, is unlikely to be able to take a complaint to the Financial Ombudsman Service or claim through the Financial Services Compensation Scheme unless they dealt with an authorised person about a regulated activity.
Marketing speculative illiquid securities of this kind to ordinary retail investors has been banned since 1 January 2021. The FCA describes the practices used to work around the ban: unregulated introducers passing people on for a fee that comes out of the money invested; firms promoting high-risk investments without the permission to do so; and associations such as an overseas exchange listing or an FCA-authorised security trustee presented as if they were protections. The FCA has issued more than 1,200 warnings so far this year. Lucy Castledine, its director of consumer investments, said: “Big, fixed returns are a warning sign and never a guarantee.”
The accompanying consumer statement adds a point for anyone who prepares accounts. In some cases the FCA has seen, only part of the money raised is used for the investment itself, with a high proportion going to the introducer, marketing and running costs. The investment then has to perform strongly to return the original capital before any promised interest.
Where these investments show in the file
- They show as interest received on a personal tax return with no bank or building society behind it.
- As a transfer out of a personal or business account to a name that appears nowhere else in the records.
- As an item on a company balance sheet described as a loan, made by a trading company with no reason to lend to anyone.
- Sometimes as a question in a year-end meeting: “What’s the tax treatment if I’m getting 9% fixed?”
The clearest marker is missing paperwork. A regulated investment generates statements, valuations and documentation. An unregulated loan note generates a certificate and a covering letter, so the client brings a figure and little paperwork. The other things to look for in a client file are set out in what to look for in the accounts.
A company with a large idle cash balance and no plan for it is the profile these promotions are aimed at. The build-up of cash in a company, and what changed around it this year, is covered in the cash question.
In practice, the accountant sees the unexplained interest or the outbound transfer and asks about it, without a view on the merits. If the client is still deciding, the accountant explains what the self-certification statement asserts and, with the client’s agreement, makes an introduction to the financial planner before the money moves. The financial planner forms the opinion on suitability, because that is the regulated act. The division is set out in who does what.
An unexplained fixed return is asked about before it is posted, as an unexplained director’s loan would be.
What is not yet settled
The FCA has said its own powers do not reach the root of this. In its Perimeter Report, it has asked the government to review the legislative exemptions that allow certain high-risk investments to be promoted outside FCA regulation, the self-certification route among them. No change to those exemptions has been made, and no timetable for one has been published. A new regime governing offers of securities to the public came into force in January 2026, and how far it narrows this route will show in the pattern of cases over the coming year.
The accountant, who knows the client’s income and net assets, can check the statement before the money leaves.
