The FCA has today warned consumers to beware of investing in high-risk schemes from unregulated firms without appreciating the risks involved.

The regulator said many of the firms are not authorised as they rely on exemptions in the law that take them out of its remit.

That will leave people without the protections offered by taking a complaint to the Financial Ombudsman Service or making a claim through the Financial Services Compensation Scheme.

The FCA said some of the particularly risky products it has seen have been unlisted loan notes or mini-bonds.

Unlisted loan notes or mini-bonds come in several forms and are often used to finance property developments. That involves an investor lending money, often through a third-party firm, to fund property developments.

The FCA said: “While all investments come with risk, for these products the risk can be particularly high and they are generally for experienced investors who feel confident in assessing the quality of the company’s business and the likelihood of being repaid.”

The regulator said people selling high-risk, unregulated investments typically draw people in with enticing websites, marketing campaigns and social media finfluencer promotions.

It said the opportunities it has seen offered typically come with a fixed, high rate of return.

The FCA said: “We urge people considering investing to check whether the firm they are dealing with and, if different, who they are investing their money with are regulated by us, and consider if the level of risk is right for them.”

It said anyone considering investing, should use the FCA register to see whether a firm is regulated.