Advice needed urently please

jimjames

truth57 wrote: »

Post image didn't work - please try this link:

https://www.dropbox.com/s/y0ztttwdzyi23e2/OLED_TERMS.jpg

I love the Google reference for OLED :-) :rotfl:

This is what it actually means:

Equity-Linked Offshore Limited Edition Deposit. My advice, avoid it like the plague!

Wow, talk about making it confusing!

Myt reading of that is that if the index level rises a certain amount (142%) above the starting level that there is no payout.

Admittedly I'm not experienced in these structured products but it seems utterly bizarre that you would get 0% return if the index has risen too much?

atush

truth57 wrote: »

Too late I'm afraid, I already responded....does that mean I'm about to be spammed with a multitude of offers for Organic LEDs? :beer:

Yes?????????????

truth57

atush wrote: »

Yes?????????????

Not a peep so far.....but then again the night is young, and who knows what tomorrow may bring?

truth57

In the Terms and conditions it reads:

12. For the 3 1/2 year sterling OLED the 'Upper Barrier' means: the 'Index Basket Start Level x142%' and the 'Lower Barrier' means: the 'Index Basket Start Level x 60%'.
13. For the 3 1/2 year sterling OLED a 'Barrier Event' will be deemed to have occurred if the 'Index Basket Daily Level' exceeds either the 'Upper Barrier' or the 'Lower Barrier,! as at the close of business on any Index Business Day throughout the 3 1/2 year sterling OLED 'Barrier Observation Period'. Should a 'Barrier Event' occur only the original Deposit Amount x100 will be repaid on the Repayment Date.

You have to admit that this would be pure gibberish to the man in the street, and I am willing to bet that it is worded in this way precisely so that people will just accept the bank's sales team's word that it is legit and sign up. I seem to have some dim recollection of having been assured that such a 'Barrier Event' was highly unlikely to happen, and that in any case there was nothing to lose, as my capital would not be at risk.

But let's look at what this actually says: if during the entire period of the investment either of the 'Barrier Events' are triggered, then all the interest or gain accrued up until that point is no longer paid out. But who gets to keep that money?
So, if hypothetically such a trigger event were to occur one day before the Repayment Date, when up to that time it had made 41%, this amount would not be paid out - does this not seem abusive?

Who needs a bargepole? Come to that, who needs banks?

truth57

jimjames wrote: »

Wow, talk about making it confusing!

Myt reading of that is that if the index level rises a certain amount (142%) above the starting level that there is no payout.

Admittedly I'm not experienced in these structured products but it seems utterly bizarre that you would get 0% return if the index has risen too much?

Not only too much, but also too little - they have themselves covered - it's win win for them. It would be interesting to investigate how many investors signed up for this offer and ended up with zero payout, and what their reaction was. In my case only 40k was invested, but how would it feel to have invested much more, only to be told that zero interest was to be paid out after so long?
I apologize for ranting, but I am incensed.

Reaper

truth57 wrote: »

You have to admit that this would be pure gibberish to the man in the street

Structured products like these always have catches in the small print. Unfortunately they are targeted at unsophisticated investors who are the last people that should be taking them out. I expect the original sales line was something like this "potential of great returns while keeping the original capital safe - so much better than the stock market". Best not to invest in anything you don't understand just because a salesman tells you it is a good idea.

This one is more obscure than most. The "basket" should be defined somewhere, probably a mixture of bonds, shares and more unusual investments.

I seem to have some dim recollection of having been assured that such a 'Barrier Event' was highly unlikely to happen, and that in any case there was nothing to lose, as my capital would not be at risk.

To be honest this policy is better than many where your capital is at risk if a trigger point is breached. However I guess the flip side is your trigger point was more easily breached. It does sound like a fairly narrow window for a 3.5 year policy.

...then all the interest or gain accrued up until that point is no longer paid out. But who gets to keep that money?

As explained in an earlier post there is no interest. The bank has not taken your money and put it in a savings account. They have themselves taken out investments which only pay out under certain conditions. There is no pot of money.

So, if hypothetically such a trigger event were to occur one day before the Repayment Date, when up to that time it had made 41%, this amount would not be paid out - does this not seem abusive?

Not really, provided you understand that from the outset.

pip895

Lloyds seem to have been selling a number of structured products that were carefully designed to practically guarantee not to pay out anything. I got caught out myself - thought I knew how it worked & didn't read the small print.:mad:
I should really pursue them as there was some pretty blatant miss selling involved. I have put it down to experience - I will never buy a structured product again - at least not without being prepared to wade through all the fine print. Luckily in my case it was only a smallish investment. Really sorry you got caught out.

Jegersmart

truth57 wrote: »

Not only too much, but also too little - they have themselves covered - it's win win for them. It would be interesting to investigate how many investors signed up for this offer and ended up with zero payout, and what their reaction was. In my case only 40k was invested, but how would it feel to have invested much more, only to be told that zero interest was to be paid out after so long?
I apologize for ranting, but I am incensed.

We need to know what these "relevant index baskets" are. *In detail*. It would also seem pretty unfair to apply what seems to be *daily* limits that preclude the final calculation at close of business 31st December which would make sense in as much as they would take the average of the (seemingly) 3 baskets in question.

I would suggest that you/we need far more detail than that, but I am already concerned at the "Index Basket Daily Level" mentioned.

Does the documentation clearly define what the baskets are? If not, why not? I would have thought it would be a legal requirement to provide these?

J

BillJones

jimjames wrote: »

Wow, talk about making it confusing!

Myt reading of that is that if the index level rises a certain amount (142%) above the starting level that there is no payout.

Admittedly I'm not experienced in these structured products but it seems utterly bizarre that you would get 0% return if the index has risen too much?

It's fairly normal. Investors will often have a viiew that, for example, the FTSE will go up between 10 and 50%, and will want comething that pays out if their view is right. This structure will pay out far more for a modest FTSE rise than woudl a similarly priced product that promised to pay the whole upside of FTSE movement.

The P+L that a bank will take on any of these things is petty similar, a big barrer event such as described above doesn't mean that they are taking more, it just means that you are giving up a payout from one set of events to subsiidise a payout on another set.

A common one will be a note that pays a 5% coupon as long as USD / GBP is between 1,50 and 1.75, for example.

BillJones

truth57 wrote: »

In the Terms and conditions it reads:

12. For the 3 1/2 year sterling OLED the 'Upper Barrier' means: the 'Index Basket Start Level x142%' and the 'Lower Barrier' means: the 'Index Basket Start Level x 60%'.
13. For the 3 1/2 year sterling OLED a 'Barrier Event' will be deemed to have occurred if the 'Index Basket Daily Level' exceeds either the 'Upper Barrier' or the 'Lower Barrier,! as at the close of business on any Index Business Day throughout the 3 1/2 year sterling OLED 'Barrier Observation Period'. Should a 'Barrier Event' occur only the original Deposit Amount x100 will be repaid on the Repayment Date.

You have to admit that this would be pure gibberish to the man in the street, and I am willing to bet that it is worded in this way precisely so that people will just accept the bank's sales team's word that it is legit and sign up.

No, I don't accept that at all, it's absolutely plain. If the basket of stocks ever goes above 142% of the day-1 level, or below 60% of it, then the barrier is triggered, and the payout is lost.

If you did not understand what you were being sold, then you really ought not to have bought it.

Now, what was the basket in question? This sort of note could include all manner of items (I used to sell them where the basket was gold, oil, stocks, FX rates, inflation, all manner of stuff), but I susppect that it was more likely a stock index in your case. Was it on the FTSE, for example?

On this point;

It would be interesting to investigate how many investors signed up for this offer and ended up with zero payout

The answer is presmably zero, as it sounds as though your note was capital guaranteed.