Prubond

Baranduin

Has anyone used a Prubond to shelter their ISA?
The FA from the building society recommended it but I cannot find much in the way of Independant advice on this.

dunstonh

Has anyone used a Prubond to shelter their ISA?

No. It would be a very silly thing to do.

but I cannot find much in the way of Independant advice on this.

That is because you are not seeking independent advice but a sales rep from a bank. You need to see an IFA to get independent advice (it is what the I stands for in IFA).

The clue is in the name of the product. Pru's bond is an investment bond. That is a totally different tax wrapper to the ISA. It is not tax free like the ISA. It pays tax at 20% at source (although still benefits from indexation relief which typically sees that drop to around 13% on average).

A S&S ISA should nearly always be prioritised above an investment bond. This sounds like a potential mis-sale. Now, see an IFA and not a sales rep.

Baranduin

Sorry -- I may have misled you. The title of the investment is a PRUFUND investment plan. I have read the document but it does not mention anything about an ISA.
We were told that we could transfer part of our ISA pot into it. The tax free status would not be affected. It would be in stocks and shares.
I fully realise that the advice we were given may have been biased which is why I am asking on this forum.
My last experience of a consultation with an IFA was not a good one.

jem16

Baranduin wrote: »

Sorry -- I may have misled you. The title of the investment is a PRUFUND investment plan. I have read the document but it does not mention anything about an ISA.

It wouldn't. As Dunstonh says, it's an Investment Bond which is simply another tax wrapper, one that is tax deferred rather than tax-free and is only suitable for a niche market.

We were told that we could transfer part of our ISA pot into it. The tax free status would not be affected. It would be in stocks and shares.

If you were to transfer part of your ISA pot into this Investment Bond, it would indeed lose its tax-free status as stated above.

When you say transfer part of your ISA pot, are you referring to transferring from a cash ISA?

I fully realise that the advice we were given may have been biased which is why I am asking on this forum.

It's not the bias I would be worried about at the moment. It's more that the advice is plain wrong.

My last experience of a consultation with an IFA was not a good one.

Can't be any worse than this I'm afraid.

dunstonh

We were told that we could transfer part of our ISA pot into it. The tax free status would not be affected. It would be in stocks and shares.

That is a lie. Indeed, I would suggest you make a formal complaint.

ISAs are tax free. Investment bonds pay tax at source and are considered tax paid with the liability deferred until a chargeable event occurs.

My last experience of a consultation with an IFA was not a good one.

There are just under 30,000 advisers out there. IFAs handle the majority of regulated advice transactions yet account for under 1% of complaints at the FOS. There will always be bad apples in any profession but instead of not seeing a different IFA you chose to see a sales rep who is either telling you outright lies or presenting it in a way that you have not understood.

There is very little justification for withdrawing from an ISA to place the money into an investment bond.