In a market where the top savings accounts are paying up to 4.75%, an offer of 7.5% fixed interest over three years from a firm called Secured Fixed Income stands out starkly. With a minimum investment of £1,000, the bond promises “clarity of outcome” while funding the company’s lending activities. Yet that substantial premium over bank rates is, according to financial experts, a clear signal of substantial risk.
From Retail Bonds to ‘Access Bonds’: A Changing Market
At their core, retail bonds are IOUs issued by companies seeking to borrow money directly from the public. The company agrees to pay a set rate of interest—the coupon—over a fixed period, before returning the original capital at maturity. The fundamental risk is that the issuer defaults, failing to make payments or return the investment.
The landscape for these products is evolving. As of January 2026, bonds listed on the London Stock Exchange (LSE) and designed to meet Financial Conduct Authority (FCA) criteria are now branded “Access Bonds.” The LSE states these are intended to be simple, transparent, and appropriate for retail investors, often with minimum investments from just £1 instead of the typical £100,000 required for institutional corporate bonds. This is part of a broader market shift, with new FCA Prospectus Rules aiming to create a unified disclosure standard and boost retail participation.
Current examples include a five-year bond from the energy firm EnQuest, paying 9% and maturing in October 2027, and a ten-year bond from RCB Bonds, which raises finance for charities and pays 3.5%, maturing in 2031. Investors can buy such Access Bonds through major investment platforms. A subset known as “Plain Vanilla Listed Bonds” have particularly straightforward structures as defined by the FCA.
However, a second, riskier category exists: mini-bonds. These are typically unregulated, cannot be traded, and must be held to maturity. They enjoyed a surge in popularity after the 2009 financial crisis with famously mixed results. Past examples include Hotel Chocolat’s 2014 bond, which paid investors in chocolate, and the “Burrito Bond” launched by restaurant chain Chilango in 2018. That bond, which promised 8% interest and a free burrito weekly, collapsed in 2020, leaving over 1,000 investors facing losses of up to 99% on their £5.8 million investment.
The Significant Risks: No Safety Net and Hidden Pitfalls
The most critical point for any investor is that neither Access Bonds nor mini-bonds are protected by the Financial Services Compensation Scheme (FSCS). If the issuer fails, there is no recourse to recover lost capital or unpaid interest.
“These bonds might appeal to income investors looking for a better return than cash but without the volatility typically associated with equities,” says Jason Hollands of wealth manager Evelyn Partners. “But it is important to understand that access bonds are not risk-free and not a straight swap for a savings account.” He cautions that materially higher yields than savings accounts reflect additional credit and market risk.
Experts advise thorough due diligence, akin to researching a company before buying its shares. Investors must assess the issuer’s financial robustness, business outlook, and existing debt levels. Crucially, they must understand where they rank in the creditor hierarchy if the company fails; some bonds are subordinated, putting holders further back in the queue. Many retail bonds, including the EnQuest bond, are unrated, lacking a formal credit assessment. Brian Dennehy, managing director of Fund Expert, warns of a “scary mismatch between the attractive headline offer and the complexity and risks inherent in the underlying product.”
Liquidity is another major concern. Although Access Bonds can theoretically be traded, the market is small. Dennehy warns there is no guarantee of being able to sell, and a lack of buyers could force a sale at a much lower price. The catastrophic collapse of London Capital & Finance in 2019, where 11,600 investors lost an estimated £237 million on mini-bonds promising up to 11% interest, remains the highest-profile warning of the sector’s dangers.
Considering the Alternatives
For those seeking income but wary of single-company risk, diversified bond funds are a core alternative. These hold dozens of bonds selected by a professional manager, spreading risk. Corporate bond funds focus on company debt, while strategic bond funds, like the Jupiter Strategic Bond fund, mix corporate and government debt.
Darius McDermott, founder of FundCalibre, highlights the Liontrust Sustainable Future Monthly Income Bond fund, which yields 5.3% and invests in debt from firms like HSBC and Severn Trent alongside UK government gilts. He also points to the Artemis Global High Yield Bond fund, yielding 6.51%, with holdings in debt from Tesco and Aviva as well as US and UK government bonds.
Gilts—UK government IOUs—are considered virtually risk-free from default, though yields are often lower. The iShares UK Gilts All Stocks Index fund offers one route to access them. For short-term, low-risk government exposure, Treasury Bills (T-bills) are sold at a discount and redeemed at face value after periods like three months, recently offering returns around 4%.
Finally, for guaranteed capital protection, fixed-term savings accounts remain an option. Current offers include MBNA’s one-year bond at 4.36%, Market Harborough Building Society’s three-year bond at 4.75%, and Chetwood Bank’s five-year bond at 4.5%. Major high street banks like HSBC, Halifax, and Nationwide also offer fixed-rate savings products and Cash ISAs.
