📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Castle Trust. Saving Bond

Options
2

Comments

  • Reaper
    Reaper Posts: 7,354 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Tridhos wrote: »
    I find it extraordinary that they can even mention the FSCS unless this investment does qualify.
    Because it's not as simple as does/does not qualify. With a corporate bond it would depend why it didn't pay out. If there was fraud and they just took your money and ran off to Barbados then it would pay out, provided it was an authorised firm which this is. However if it was because the business did not generate as much income as expected then they wouldn't. That is why they can get away with the word "may".

    As a rule you should identify whether you are investing in savings (£85,000 complete cover) or investments (£50,000 cover on rare occasions but best to assume none).

    At least you did the right thing by doing a bit of research before investing. It's amazing how many people part with large sums of money to companies they have never heard of without doing so much as a Google.
  • Reaper wrote: »
    Because it's not as simple as does/does not qualify. With a corporate bond it would depend why it didn't pay out. If there was fraud and they just took your money and ran off to Barbados then it would pay out, provided it was an authorised firm which this is. However if it was because the business did not generate as much income as expected then they wouldn't. That is why they can get away with the word "may".

    As a rule you should identify whether you are investing in savings (£85,000 complete cover) or investments (£50,000 cover on rare occasions but best to assume none).

    At least you did the right thing by doing a bit of research before investing. It's amazing how many people part with large sums of money to companies they have never heard of without doing so much as a Google.

    Many thanks for taking the trouble to reply. In a previous post you mentioned a similar product with lower risk, is that still available please?
  • Reaper
    Reaper Posts: 7,354 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Tridhos wrote: »
    In a previous post you mentioned a similar product with lower risk, is that still available please?
    Actually somebody else pointed elsewhere out there is a catch to that one, a potentially undesirable "call".

    There are other similar ones though. It was a "preference share". You would have to make sure you understood the subject and the individual share before diving in though. I created a thread on the subject some time ago here:
    https://forums.moneysavingexpert.com/discussion/3626651
    The figures have changed but the principles are the same.

    Like I say though, don't dive in until you are sure you understand them. Alternatively just about any company bond will give you better returns than Castle and if you stick to the big ones hopefully less chance of losing your money too.
  • Lucaz1
    Lucaz1 Posts: 2 Newbie
    Fifth Anniversary Combo Breaker
    edited 19 November 2014 at 5:05PM
    Hi Touchstone,
    I have checked out all the Castle Trust company & financial registrations. They are in order. What you have been looking at is an investment bond. The investments are guaranteed by the FSA only up to 50K because the organisation is not a bank. Anything over 50K invested in their Fortress Bonds is not guaranteed, therefore you carry the risk for sums over that amount The other investment arms of Castle financial business are not FSA guaranteed in the same way stocks and shares are not, you would invest in those sectors at your own risk.
    Hope this helps
    L
  • Motormad
    Motormad Posts: 134 Forumite
    dunstonh wrote: »
    To be honest, I cant see how the FSCS could cover a standalone corporate bond.



    Given the poor quality of moneyweek that would not surprise me.

    I wonder if you can give me some idea of your views on the Motely Fool,Dunstonh.
  • dunstonh
    dunstonh Posts: 119,722 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Motormad wrote: »
    I wonder if you can give me some idea of your views on the Motely Fool,Dunstonh.

    I have no recent experience to construct any view.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Post of the Month
    Lucaz1 wrote: »
    Hi Touchstone,
    I have checked out all the Castle Trust company & financial registrations. They are in order.
    But someone reading this thread should note that this does not attest to their solvency or likely investment performance. It just means they exist and have not yet been sanctioned by the regulator. It is a definitely a step up from other unregulated firms that are sometimes talked about here where the companies and FCA registrations don't even seem to exist. But it doesn't mean your money is safe.
    What you have been looking at is an investment bond. The investments are guaranteed by the FSA only up to 50K because the organisation is not a bank. Anything over 50K invested in their Fortress Bonds is not guaranteed, therefore you carry the risk for sums over that amount
    This is close to what we were saying above. However your version is inaccurate and/or misleading because:

    a) The FSA do not guarantee anything and never have (and they no longer exist because they devolved into the FCA and PRA); what you are thinking of, is the FSCS, who operate a compensation scheme. Which is not a guarantee, it is compensation that may apply in certain circumstances to certain investors.

    b) The fact that anything over £50k is not guaranteed should not be taken to mean that anything under £50k is guaranteed. As mentioned in previous posts, the potential compensation limit from FSCS may apply, in limited circumstances.

    Make no mistake, whether you invest £49k or £51k you do not have a cast iron guarantee that you will get it all back.

    The reason the amount of interest they will pay to you for a 1 year investment or a 2 year investment etc is higher than the high street banks is that you are taking more risk. Some people will be fine with that. Others may think that if you are taking risk by buying these bonds, you should probably also consider a whole range of other companies issuing bonds and equities that can be wrapped in an ISA, which also carry risk but may offer a better prospective return for the relative risks.
  • TCA
    TCA Posts: 1,611 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Lucaz1 wrote: »
    The investments are guaranteed by the FSA only up to 50K because the organisation is not a bank.

    Call me a cynic, but a bit odd that you'd sign up to the forum today to reply to an old thread. I think bowlhead's response covered it succinctly - there are no guarantees - only a compensation scheme in very specific circumstances.
  • jimjames
    jimjames Posts: 18,686 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 19 November 2014 at 9:06PM
    Lucaz1 wrote: »
    Hi Touchstone,
    I have checked out all the Castle Trust company & financial registrations. They are in order. What you have been looking at is an investment bond. The investments are guaranteed by the FSA only up to 50K because the organisation is not a bank. Anything over 50K invested in their Fortress Bonds is not guaranteed, therefore you carry the risk for sums over that amount The other investment arms of Castle financial business are not FSA guaranteed in the same way stocks and shares are not, you would invest in those sectors at your own risk.
    Hope this helps
    L

    Highly misleading to suggest that these bonds are in any way similar to a bank and have any guarantee in the same way as bank deposits.

    Bonds are not protected should the company go out of business and I'd suggest it may be less risky to invest in a FTSE100 tracker than this bond as the tracker is split across many companies not relying on the fortunes of one.

    With this if Castle trust goes bust and fails to pay out then you WILL lose money. It is no different to any other bond fund that has a failed bond, you do not get FSCS protection from a bad investment, only if it has been fraud or mismanagement of the actual funds. It does not pay out for poor investment performance.

    I wonder how long before FSCS take action to stop their name being used. See this story in Telegraph about it.

    http://www.telegraph.co.uk/finance/personalfinance/savings/11065151/Concerns-over-safety-of-2.25pc-savings-bond.html

    This comment in particular

    "This is blatantly a violation of the intention behind the FSCS – and it won't work," said one. "In my opinion if the company goes bust the FSCS won't pay out."
    Remember the saying: if it looks too good to be true it almost certainly is.
  • jimjames
    jimjames Posts: 18,686 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 19 November 2014 at 9:14PM
    dunstonh wrote: »
    To be honest, I cant see how the FSCS could cover a standalone corporate bond.

    They are not covering a standalone bond because of the way it has been setup.

    Castle trust have constructed a specific corporate structure in order to claim FSCS protection by claiming to run the bond in a subsidiary company as a fund manager despite it being only the one bond in their own company that is invested. So it is effectively a "bond fund" but I'm assuming the FSCS protection would only cover certain scenarios which doesn't include poor performance of the investment.

    I suspect that it will be ruled unprotected at some point soon so I hope anyone invested is prepared to lose money.
    Remember the saying: if it looks too good to be true it almost certainly is.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.1K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244.1K Work, Benefits & Business
  • 599.1K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.