So here we go again, another saga getting under way about unsuspecting ‘mini-bond’ investors being ripped off.

I suspect the regulators and FSCS are already fed up hearing about mini-bonds following the £236m collapse of London Capital & Finance (LCF) which left more than 11,000 investors in the lurch, some of them separated from a good chunk of their life savings.

This time the culprit is a firm called Blackmore Bonds which appears to owe £45m to investors who put money into its bonds.

Administrators have only just been appointed this week to pick through the debris of Blackmore, so it’s too early to say if it will replicate LCF but there are striking similarities, particularly in the way the bonds were marketed.

Mini-bonds are often pushed with some very heavy web marketing, targeting investors who mostly just want to beat poor deposit account returns.

There’s no surprise people look to ‘mini bonds’ as the next step for a better return. Bond sounds like a safe word, doesn’t it?

People associate bonds with phrases such as “My word is my bond” or ultra-safe Premium Bonds as well as safe, steady returns. Sadly none of these phrases can be associated with Manchester-based Blackmore Bonds which touted the bonds as a way to invest in residential developments in the UK and get steady returns. What could go wrong?

But things did. We’ll need to wait for findings from the administrators but when Blackmore failed to pay out expected payments to investors in October alarm bells started to ring. It will take months or even years to sort out the mess.

The problem is the administrators may sort out Blackmore but the regulators will not sort out the growing problems with mini-bond firms and similar bond schemes, many of them unregulated or only semi-regulated as in the case of LCF.

I did a quick web search earlier this week for ‘mini-bonds’ and the third listing on the first page was an ad from the FCA offering guidance on bonds, so far so good. However, the top paid ad was from a firm claiming to offer a variety of mini-bonds from a number of providers offering anywhere between 2% to 20% annual returns.

Some at the lower end were from reputable banks and some at the higher return end were highly speculative and the identity of the provider was vague or undisclosed. The risk of these higher return bonds was not made clear and there was no mention of FCA numbers or FSCS cover despite claims that capital was 100% “legally protected.”

Many of these heavily touted sites do not directly sell the products they promote, they simply pass on leads to others, a tactic that is becoming all too common. To be fair, there are good lead generators (Unbiased for example) and bad ones (many mini-bond search engines). It’s a poorly regulated area.

However, I cannot believe that search engines do not have some idea that some of these mini-bond are touting unrealistic returns.

Most of the disastrous mini-bond firms have used ‘digital marketing’, some spending millions to find victims, sorry ‘investors.’ The net effect is a huge burden on the FSCS, Financial Ombudsman Scheme and the entire regulatory system not to mention the cost of funding all these, which can often fall on Financial Planners and other regulated firms.

There is no easy answer but there will be other LCFs and Blackmores.

But here’s a simple part of the solution: make search engines liable for accepting financial advertising from unregulated firms. I suspect things might change pretty quickly.

Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience.  This topical comment on the Financial Planning news appears most weeks.

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