The City regulator has censured Equity for Growth (Securities) for approving financial promotions tied to “loan notes” that were misleading due to the failure to disclose substantial commission fees charged to investors. The Financial Conduct Authority (FCA) said the firm authorized promotions from third-party companies that were “unfair, unclear and misleading,” raising concerns amid a broader crackdown on high-risk mini-bond investment schemes.

Equity for Growth, which operated under the FCA’s “appointed representative” framework, was responsible for ensuring that its representatives complied with regulatory standards and were “fit and proper.” However, the firm entered liquidation in March, largely because it could not cover compensation payments ordered by the Financial Ombudsman Service related to promotions it had approved. The FCA noted that it would have imposed a financial penalty on Equity for Growth were it not already defunct.

Among the appointed representatives was Hunter Jones, a promoter linked to several collapsed schemes including the Dolphin property investment. Dolphin, a German property project, went bankrupt in 2020 leaving approximately 25,000 investors worldwide with losses approaching £1 billion. Its founder, Charles Smethurst, was convicted of fraud in Germany last year, with many British and Irish investors losing millions.

Hunter Jones was also involved in promoting loan note schemes such as Magna Group, which was wound up in 2021 after its investments were found to be misleading. The UK government’s Insolvency Service reported that directors of Magna continued to solicit investor funds even after insolvency. The FCA’s judgment highlighted that Hunter Jones “frequently breached regulatory obligations.” Despite no longer being regulated, Hunter Jones remains active and declined to comment on the FCA findings. The company has previously stated it has “learnt lessons” from past issues.

The FCA’s intervention stems from growing anxiety over mini-bond and loan note products marketed with promises of attractive and secure returns, which carry significant risk and have, in some cases, involved fraudulent activity. The regulator emphasized that the high commission fees deducted from investors’ money were often so substantial they undermined the viability of the underlying investments.

This case adds to a series of regulatory actions addressing misleading financial promotions tied to complex, high-risk investment products that have resulted in significant investor losses in recent years.