In both cases the bonds were claimed to be “secured” against assets but there is scant sign that this security will lead to investors receiving back more than a fraction of their money at best.

In retrospect the warning signs were there. These two failed ventures were both part of complex webs of different firms, some of which were based overseas. Such a structure makes it much easier for money to be moved around at the whim of the individuals involved and indeed beyond the oversight of UK regulators and courts.

The firms behind the bonds were also small and unknown.

Perhaps the biggest warning sign was the attractive interest rate itself. The fact that bigger returns come with bigger risks is the first rule of investment. Savers who were not so deprived of alternative sources of income would probably have smelt a rat. 

After these failures, my feeling is that the entire mini-bond sector is best avoided unless the issuer is long established and reputable, as a few have been, or unless you are equipped and willing to carry out exhaustive research into the detail of the offer.

Retail bonds, which are listed, offer less but are far safer.

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