Castle Trust 1 year bond 2.00%

Repercussionist

Is Castle Trust reputable?

Castle Trust is the trading name of Castle Trust Capital plc, company number 07454474 and Castle Trust Capital Management Limited, company number 07504954. Each firm is authorised and regulated by the Financial Conduct Authority. Registered office: 10 Norwich Street, London, EC4A 1BD. Registered in England and Wales.

ColdIron

It's not a question of reputability, it's a question of knowing what is on offer. This is an investment product, not a cash deposit if that's what you thought it was. I might say that 2% is not much compensation for the amount of risk that you would be taking on

If you are eligible for FSCS protection, the FSCS may pay compensation on your investment, up to a maximum of £50,000 per person.

A higher limit of £85,000 applies in relation to firms offering deposits such as banks and building societies, but Fortress Bonds and Housas* are not deposits.

if you invested in a Growth Housa and if the value of your investment falls during the investment term, the FSCS will not compensate you for any loss arising from this market movement;

See

https://www.castletrust.co.uk/financial-services-compensation-scheme-investments

bowlhead99

I can't say if they are "reputable" or not but what is always pointed out when this provider is mentioned in the context of savings bonds, is the fact that it is not a savings deposit bond but an investment product.

That means it doesn't qualify for the FSCS protection on cash deposits but at the most, the lower £50k limit for investment products in respect of a provider going bust while owing you money - and the rules around that in relation to Castle Trust's specific structure are somewhat complex and have not been "tested" as Castle Trust has not gone bust yet.

https://forums.moneysavingexpert.com/discussion/5645851

Basically Castle will buy you an investment which is held on your behalf by a nominee company and then on 'maturity' the nominee company will on your behalf sell that investment to a different entity (ie buy it back from you) for an amount which is as much as you were hoping to get on maturity.

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

So, caveat emptor and all that.

Malthusian

If you were going to risk 100% loss of all your money on one of these things, then surely you should at least hold out for the 8% per annum that is more usually offered.

And no, you shouldn't risk your money on any of them.

Ignore the "some experts question" that the Telegraph is forced to use by their in-house lawyers. The FSCS does not cover this product. Period. The stuff about expert legal advice is guff. 50% of lawyers are always wrong, and a lawyer will endorse any opinion you ask them to if you pay them enough.

soulsaver

Plus there are 1 year bonds covered by the FSCS if not at 2% then very near. DYOR.

bowlhead99

Malthusian wrote: »

Ignore the "some experts question" that the Telegraph is forced to use by their in-house lawyers

the stuff about expert legal advice is guff. 50% of lawyers are always wrong, and a lawyer will endorse any opinion you ask them to if you pay them enough.

I do agree with that.
However,

The FSCS does not cover this product. Period

That is strong phrasing. It's true the FSCS depositary scheme doesn't cover it, but they are saying the FSCS investments one does. I contend that you don't know that it doesn't as you haven't read every grain of their business model and haven't worked at the FSCS taking it through a review process.

I agree with a poster on another thread that the FSCS was not designed with the purpose of covering such a "pseudo cash deposits" business model under the investment leg of their consumer protection rules. However I don't think that's enough to say the FSCS couldn't or wouldn't cover a failure in the model, depending on the nature of what goes wrong.

You could of course say - I'm not comfortable with this so it's far safer to just believe it isn't covered, especially as I don't think the FSCS is going to have much appetite to cover it just because someone found an innovative loophole and had a lawyer sign it off - and then I might lose everything so of course I won't invest, my choice is made, period. However that's different from categorically starting that FSCS does not cover it period.

It's like being atheist instead of agnostic. Being nostic (and atheist) is a bigger claim than just to admit you don't know and either side might be right.

soulsaver wrote: »

Plus there are 1 year bonds covered by the FSCS if not at 2% then very near. DYOR.

That's the real reason not to bother. If someone will give you 6 or 7 times the base rate for a cash deposit there's little point taking a punt on an unproven innovative solution that's only going to be giving you 8x.

Malthusian

bowlhead99 wrote: »

That is strong phrasing. It's true the FSCS depositary scheme doesn't cover it, but they are saying the FSCS investments one does. I contend that you don't know that it doesn't as you haven't read every grain of their business model and haven't worked at the FSCS taking it through a review process.

I contend it's irrelevant. The unnamed "bond expert" in the Telegraph's article is correct. "This is blatantly a violation of the intention behind the FSCS – and it won't work."

The FSCS is not going to pay out on unregulated minibonds because the people behind them think they're clever.

It's like being atheist instead of agnostic. Being nostic (and atheist) is a bigger claim than just to admit you don't know and either side might be right.

It's like the difference between 99.9999% recurring and 100%. There isn't one.

I am 99.999999% recurring certain that in the event that Castle Trust defaults the FSCS will not cover investors' losses. I am so certain I will bet a fiver on it.

bigadaj

And the telegraph is very happy to take the advertising from castle trust, hypocrisy.