Asset Income Plan

elkayem

I'm hoping someone's heard of these, and can give me an idea whether they're worth looking at.

As it has been explained to me, ABC Consortium, who are running the plan, take a charge on your property of up to 50% of the value of the property, and assign it to an "A rated or higher, nationally recognised insurance company". The insurance company then pay you (the house owner) 5% of the value of the charge every year for 10 years. At the end they release the charge with nothing to pay and no loss of equity.

If the Insurance Company become insolvent, there is an insurance policy protecting which pays the value of the charge.
This all sounds a bit too good to be true. Can anyone point out any loopholes I may be missing?

dunstonh

I have heard of it mainly through people spamming. I don't know much about it but it seems to be "retailed" by non-regulated firms which suggests it is not a regulated product. That is usually enough to put people on guard.

maximuss_2

elkayem

No doubt many people will say the same thing, if it sounds too good to be true and so on......

The plan is a non regulated product which means you wont have the same protection as a regulated product. That is not to say it is no good. The reason for the plan is complex but it can serve a purpose. If you are interested then make sure you have the contracts looked at by a Solicitor, preferably one who would know's about such matters.

Linton

ABC is not registered with the FSA but a bit of googling comes up with:

Allied Business Consortium T/A ABC PLC, with an address at M33 6JS. This is a private house in Sale. It would appear that ABC PLC isnt a Public Limited Company, it's just that PLC is part of its trading name.

Whether this is anything to do with your company I dont know but......

Loughton_Monkey

elkayem wrote: »

If the Insurance Company become insolvent, there is an insurance policy protecting which pays the value of the charge.

er...... think about it! .........

jimjames

I'm confused - easy to do lol.

So you've got 10 years worth of income, after 10 years you have 100% of your property and the insurance company walks away empty handed having paid you for 10 years.

Why would they do that?

Loughton_Monkey

Solvency margin requirements were, I believe, recently raised.

As amazing as it sounds, it has been mooted that by the simple 'trick' of converting their balance sheet to show extra assets on one side - plus corresponding liabilities on the other - as represented by 'charges' on private property - seems to increase their solvency margin.

The 5% represents an equivalent of a 'bond yield'.

To me, the biggest and greatest 'issue' with it - as far as I can see - is that if the FSA are so stupid as to deem this practice to achieve 'real' boosts to their solvency, then I am utterly staggered. Personally, I would rule out that this stupid idea goes ahead since it is pure madness.

As an 'investment', then it's not unlike a Corporate Bond. I believe an Insurance Company can go bust - not least because I have seen it happen [e.g. Independent].

To rely on... er... another Insurance company to bail out my 'investment' is rather laughable I think. A bit like speculating that - without the Government - Lloyds Bank could have come along and bailed out Northern Rock! If that didn't work, then maybe Halifax could have bailed out Lloyds......

elkayem

Thanks for your replies. As Loughton Monkey says, it does all seem to be about solvency margins. The literature is a bit vague though, and seems to focus more on the wonderful lifstyle aspect and less on the actual details (as well it might, I guess). My friend's wife is a financial advisor and she keeps raving about them. I just can't quite make myself trust it. Oh well, no free money from the sky this time then

Reaper

It sounds like what was raised ages ago in this thread.

The main problems were not only that it was dubious whether it works for the insurance companies, dubious whether your money would indeed be ring fenced if the insurance company did go belly up, but more importantly not a single insurance company in the UK had signed up for the scheme.

Quite why they went on marketing it when it wasn't available I can't imagine, except as a tool for salesmen to get in the door then flog the customer other stuff instead.

dunstonh

My friend's wife is a financial advisor and she keeps raving about them.

Bit risky for an adviser to get involved in an unregulated scheme. The FSA has recently taken action against firms that have recommended non regulated schemes. That doesnt mean all non regulated areas are bad though or that every non regulated scheme carries risks to the adviser. Just generically it is risky.

I am also dubious about protections. There would be no FSCS protection as you have to be an FSA authorised firm to be able to offer it.

maximuss_2

There still seems to be some concern about this plan and I think some people are making judgments without the facts. Imagine you own your own home and you have money in the bank, a car, some investments maybe.Should you hit on hard times you might use your money to get by, then you might sell your car or cash in your investments. Almost certainley, for most people , you might seel your home as a final resort. This is what would happen with the Aseet Income Plan. The charge would sit on the balance sheet as an asset. On that basis, with adequate assets to satisfy the capital adequacy requirements, an insurer can continue to operate their business profitably. You might say that this is not a real asset, but think about mortgage lenders. They do just this, they take a charge and in some cases use the asset to raise other funds.Dont forget that this is an E. U directive, remember straight bananas? Crazier still some might say is paying farmers not to farm, it happened! So before the scare mongers out there steal the opportunity for some in real need to generate some much welcome income without signing over large amounts of equity for equity release or just continue to live in poverty,please try and balance your therories with facts. Anyone can take the deatils and run it by a Solicitor to make sure it's right for them, if not dont do it, simple. And yes I do have a vested interest in the success of this plan but not at the detriment of someone losing their home.