Reader questions: Is my fixed-rate bond an unregulated mini-bond?

The word “bond” can mean many things. Some are perfectly safe, others have no guarantees, regulation or compensation if things go wrong

Coins placed on the wooden floor, concept saving money for future.

Pete writes: “I have a concern after reading your recent column regarding mini-bonds. I invested in a fixed-rate bond with Charter Savings Bank some years ago. Is this a mini-bond? Should I be concerned?”


I understand your puzzlement, Pete. The word “bond” can mean many things. Some are perfectly safe — like the fixed-rate bond you took out from a bank.

It’s essentially just a deposit account that you cannot access for a set period of between one and five years. As with any bank deposit, it’s fully protected up to £85,000 per person in that institution.

National Savings & Investments also issue bonds that are completely safe up to any amount.

Corporate bonds are loans to a company. They are not safe. If the company goes bust, you may lose your money.

However, if they are bought in a fund, they are protected up to £50,000 (rising to £85,000 from 1 April). Mini-bonds — which I warned against in a column last month — are the riskiest of all. There are no guarantees, no regulation, and no compensation if things go horribly wrong, as they often do.


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