question on Natwest autopilot

razorbold

Hi
Just recieved a letter from Natwest about my autopilot bond.
they are offering to switch it to a fixed rate for the remainder of the term, it states they have to do this after being asked by the FSA.
They are also offering the ability to close it and pay interest at 3.9%.
originally we were looked in for the full term.
Anyone know why there are these changes andoptions?
thanks

DHowUK

Hi, may I ask what AutoPilot Issue you bought? I've been advised that only for certain issues they are offering such terms but they have not disclosed why or how they are differentiated?

Thanks

Malthusian

My educated guess is that they aren't offering compensation when the "missold" Autopilot bond has done better than a fixed rate deposit would.

Although if you ask them really nicely to give you less money you might be able to persuade them.

Although it's a bit late for the OP I'll answer his question - after a mystery shopping exercise by what is now the FCA, RBS / NatWest were told these bonds were too complicated for the people they were flogging them to, and anyone they did flog them to has to be offered compensation. It seems to have generated surprisingly little publicity but Tony Hetherington in the Daily Heil has covered it.

jamesd

razorbold wrote: »

Just recieved a letter from Natwest about my autopilot bond. they are offering to switch it to a fixed rate for the remainder of the term ... They are also offering the ability to close it and pay interest at 3.9%. ... originally we were looked in for the full term.

The results of these are linked to the performance of various investments so it's very important to know just when you got yours and which time periods are used to measure the investment performance. For example, if you got one that had any time from mid November 2008 through mid 2009 as the starting date for performance measurement it would probably be best to hold on to it because of the amount of growth that has happened. But that depends on the exact measurements being used for the value, including just which stock market, commodity and property price measures are used. If say it had a worst performer limit and used oil, you might be best off accepting the payment because of the changes in oil price.

One issue with such products can be that just holding the investments directly can have been a better deal. The autopilot investments means that you wouldn't get back less than you paid in and this protection has value, but maybe not enough value.

dunstonh

Certain issues of the product were very poor quality. The ones identified have to give the customer an option to withdraw early without cost but with interest (instead of the actual return on the product). Or they can stay put if they decide to stick with the terms.

It avoids complaints later on too as the person was given a choice.

jamesd

dunstonh wrote: »

Certain issues of the product were very poor quality.

Indeed. If it's using the RBS UK Autopilot Index it appears to not have been a very good product. If it is similar to the RBS product it looks like a momentum-based index involving commodities, emerging markets, developed markets and housing. And with start dates for five year ones ending around now that were not good. With little prospect of serious improvement over the next few years.

I wonder how many customers realised that they might not get paid even their original investment if NatWest/RBS went bust.

Malthusian

I wonder how many customers realised that they might not get paid even their original investment if NatWest/RBS went bust.

From what I've seen these were structured deposits being flogged so they would be compensated by the Financial Services Compensation Scheme as long as they didn't invest more than the limit.

I believe there were structured products linked to this index which were loan-based, not deposit-based - in which case as you say if RBS went bust they'd lose the lot. But what I've read suggests that the NatWest / RBS misselling involved structured deposits.

DHowUK

To be clear, I actually have bought the Autopilot product from Nat West. The performance has been absolutely dreadful. I recently read a Which.co.uk article and the original post on this thread that discussed the fact that all customers would be contacted and offered the option to switch to a backdated fixed rate product. I have not been contacted or offered any alternative by NatWest/RBS. I have spoken to a NatWest advisor who suggested that only certain issues were being offered an alternative product. This was in contradiction to the quotes attributed to RBS which I am following up on. I was keen to find out what customers of different issues who have been contacted have in fact been offered.

dunstonh

Autopilot is an internal brand name covering many product options. Not all of them were bad.

The performance has been absolutely dreadful.

Its a bank product. So, what do you expect? However, putting that aside, performance is not the issue with these. It was the charging structure and upside potential that were the issue with the bad ones. The better ones will not be offered a get out option.