For many, the action will be seen as too little too late from a regulator repeatedly accused of failing to spot or act on the growing crisis around minibond firms. It was a scandal that dogged the latter stages of Andrew Bailey's time in charge of the organisation and gave rise to some questioning over whether he was suitable for the role of governor of the Bank of England. He eventually succeeded in winning the job.
Sheldon Mills, interim executive director of strategy and competition at the FCA said: "We know that investing in these types of products can lead to significant and unexpected losses for investors.
"We have already taken a wide range of action in order to protect consumers and by making the ban permanent we aim to prevent people investing in complex, high risk products which are often designed to be hard to understand."
He added that since the January ban, firms have simply moved on to sell similarly high-risk schemes to an unsuspecting public in other guises. The FCA has now extended the ban to cover some of these.
Essentially, the curb is hoped to prevent all securities which are illiquid - meaning they cannot be easily bought and sold - within the scope of the ban.
LCF victim Ian Davis, 59, who lost his savings, said: “This is great news. It’s come too late for me, but hopefully nobody else is going to get caught out again like I did.
“I just can’t understand why it took the FCA so long to act.”
One 86-year-old who preferred not to be named and has lost more than £600,000 to three minibond firms said: “This is wonderful news. I just hope this means there won’t be more people suffering a downfall like I’ve had.”
Mark Taber, consumer champion against minibonds, said the FCA's response was "laughable." He said unscrupulous firms had already migrated into other products to avoid the regulator's scrutiny. "All they've done is extended a ban that's been in place for months and isn't working," he said.
He called for Google to be forced to vet the advertising it carries and for the FCA to prosecute the people behind the ads. So far there has not been a single prosecution, even though the FCA has the power as the relevant crime agency to prosecute misleading financial promotions, Taber said.
Minibonds were launched at a dizzying pace in the past four or five years after pension freedoms left many older people with access to their life savings for the first time. Facing record low interest rates and poor returns on conventional assets such as government bonds, many were easily persuaded by promises of returns of 8% or more.
Their launch corresponded with the increased sophistication of online marketing techniques, which allowed bond firms to target the elderly through social media and Google.
In many cases, bondholders' cash ended up apparently going into pet projects of the schemes' organisers. These ranged from from a luxury magazine in the case of "algorithmic trading" investor Colarb to horse stables at LCF.
At both LCF and Basset & Gold, investors say they were told their money was going into scores of small businesses and property developments. In the case of LCF, it ended up going to only a handful of businesses connected to the organisers, while at B&G, it all went into payday lender Uncle Buck, which collapsed earlier this year.
In some cases, large amounts of money appear to have gone into fees to firms linked to the organisers.
Minibonds were also controversial because loopholes in the FCA regulation framework meant they were only partly regulated, meaning investors were left unprotected by industry compensation schemes when they went bust.
The FCA today acknowledged it had "limited powers" over the issuers of minibonds, who are usually unregulated, but can act when the investments are approved of or promoted by regulated firms.
