Investment Bonds paying 3.924% or 5.4%

wildfirejc

I just came across two companies offering the above. Aberdeen Standard Investments and Kleinwort Hambros. They both stipulate that these bonds (BT and Telefonica and Tescos) are covered by FSCS/FCa from £50K to £85K.
Initial investment is a minimum of £50K. The guys I spoke to insist that my capital is not at risk due to the FSCS/FCA compliance.
In 1 year, I will get my capital and interest back minus 0.4% charge. When I apply for the bond, I will also have to pay an admin fee of £18.
I have never come across such a high interest paying bond with capital NOT at risk. So I did a little digging - phoned up FSCS and FCA but both are not able to help. They don't know what I was talking about. I have a friend who used to be a stockbroker. He's never heard of such a thing.
Can anybody throw some light on this?
What's the catch? Thanks in advance.

Zanderman

If they ('the guys') are telling you they are protected up to £85k they are fibbing. That limit is only for banks, building socs etc, not for investments.

And if they fib about that, I'd suggest they can fib about anything.....

So, the catch is; - the guys are fibbing.

Capital will, almost certainly, be at risk.

Zanderman

Just to add - you say you 'came across the two companies'.
How?
Direct or via 'the guys'
And 3.924%?? What sort of ridiculous percentage is that?
To 3 decimal places?!!
Feels so scammy I can feel an itch coming on.

cisamcgu

I may be wrong, but isn't Aberdeen Standard Investments part of Aberdeen Asset Management and Standard Life Investments ?

Reputable I thought ?

dunstonh

They both stipulate that these bonds (BT and Telefonica and Tescos) are covered by FSCS/FCa from £50K to £85K.

These are not investment bonds. Investment bonds are a totally different product.

This are likely to be corporate bonds. In which case FSCS protection does not apply.

The guys I spoke to insist that my capital is not at risk due to the FSCS/FCA compliance.

What "guys"? Guys down the pub?

I have never come across such a high interest paying bond with capital NOT at risk. So I did a little digging - phoned up FSCS and FCA but both are not able to help. They don't know what I was talking about.

What you describe doesnt give much to go on. They sound like corporate bonds but they are not retail financial products and shouldn't be "marketed" to the public. They are a bit like shares in that you can choose to buy them but you shouldn't be seeing adverts or marketing for them like you would a retail financial product.

Corporate bonds though are not capital guaranteed and you would not get the same amount back in 12 months (unless by fluke it happened to have the same redemption price as when you purchased).

I can understand why the FSCS didnt understand what you were referring to as it doesnt match any retail financial product and doesnt really match corporate bonds. It is a mix of information.

Maybe you could tell us the standing of these "guys".

Malthusian

This is a clone scam. It has absolutely nothing to do with any of the companies you named. It may be a new incarnation of this one where scammers claimed to be from Charterhouse selling VW bonds.

The catch is that if you give your money to people you already know are scammers (as you know that corporate bonds paying 5.4% aren't FSCS-protected) you will never see it again.

wildfirejc

hank you all for your input. Here is a cop of the email and if I could, I will also attach the attachment from that email. Further to our recent conversation please see the attached fact-sheet (Key investor document) for the British Telecom investment bond ( BT GROUP ). I have also included some company literature which outlines the basics of investing.


FACT-SHEET.

The investment bond fact-sheet (attached) provides you with all the relevant information to help guide you in making your decision. Some key points that should be highlighted are as follows

Investment term 1-3 year
Capital guaranteed, FSCS / FCA (£50,000)
Interest paid quarterly, bi-annually - annually
Fixed rate of 3.924% annually

BT GROUP PLC.

BT Group plc (trading as BT and formerly British Telecom) is a British multinational telecommunications holding company headquartered in London, United Kingdom. It has operations in around 180 countries and is the largest provider of fixed-line, broadband and mobile services in the UK, and also provides subscription television and IT services.
BT controls a number of large subsidiaries. BT Global Services division supplies telecoms services to corporate and government customers worldwide, and its BT Consumer division supplies telephony, broadband, and subscription television services in Great Britain to around 18 million customers.


ISSUER AND REGULATORY NOTES

The bond is issued by the BT Group (British Telecom) and underwritten by Aberdeen Asset Management. Aberdeen Asset Management is fully regulated by the FCA (Financial Conduct Authority) which affords you all the necessary investor rights and protection under the Financial Services Market Act 2000 (FSMA).

The investment is issued on a first come first served basis until the total amount of £175mn has been achieved.

Should you wish to register an interest please make sure you request an application at your earliest convenience.


Regards,
Paul Windsor
Investor Relations Manager
0131 507 0015

HappyHarry

These looks like corporate bonds. See dunstonh's comments above.

You would not be protected by the FSCS, and the implication that you would be is misleading.

Googling the phone number didnt come up with anything, which starts ringing very load alarm bells.

Who is this person recommending these bonds, and how did the initial contact come about?

doe808

Yeah, looks like a cloan scam.



Who are 'these guys'?

dunstonh

From the information posted in#8 I make the following observations...

The investment bond fact-sheet (attached)

It is not an investment bond, as previously mentioned.

Investment term 1-3 year
Capital guaranteed, FSCS / FCA (£50,000)
Interest paid quarterly, bi-annually - annually
Fixed rate of 3.924% annually

BT do have a corporate bond which matures on June 25th 2042 with a coupon of 3.924%. Coupon is paid annually.
It was listed on the LSE and Berlin Stock Exchange in June 2018.

So, issues here are
1 - It does not have an investment term of 1-3 years. Maturity is just over 23 years away.
2 - you can buy and sell these on the LSE (assuming you wouldnt use Berlin) in the interim.
3 - The coupon is annual. Not the frequency it mentions
4 - There is no capital guarantee. Genuine financial services companies would know that the "guarantee" word is protected and must mean guaranteed. There is no guarntee of any sort on this corporate bond. It is 100% loss potential.
5 - The FCA have no protection level.
6 - The FSCS does not apply to corporate bonds.
7 - The bond was issued in 2018. It is not a new issue.

The bond is issued by the BT Group (British Telecom) and underwritten by Aberdeen Asset Management. Aberdeen Asset Management is fully regulated by the FCA (Financial Conduct Authority) which affords you all the necessary investor rights and protection under the Financial Services Market Act 2000 (FSMA).

The investment is issued on a first come first served basis until the total amount of £175mn has been achieved.

The 3.924% bond was issued last year. I can find no reference online showing BT issuing another one at an identical rate at this time. Here are some of BTs other bonds issued at the same time to raise £2bn.

1) GBP 330,000,000 3.64 per cent. Notes due 25 June 2033;

2) GBP 330,000,000 3.883 per cent. Notes due 25 June 2039;

3) GBP 340,000,000 3.924 per cent. Notes due 25 June 2042;

4) GBP 330,000,000 1.613 per cent. CPI Linked Notes due 25 June 2033;

5) GBP 330,000,000 1.739 per cent. CPI Linked Notes due 25 June 2039; and

6) GBP 340,000,000 1.774 per cent. CPI Linked Notes due 25 June 2042.

There appears to be no mention of any new bond being issued that I can find and it would be unusual to get the exact same rate as an earlier one.

I am hearing alarm bells as the information is worded badly. It doesn't sound like it was written by someone in financial services. it gives incorrect information which is totally wrong and could be spoofing/cloning by using brand names with a real corporate bond but your money may not go to that., i.e. you hand the money over thinking you have a BT corporate bond but the money has gone off to third party who you can never trace.

Linton

BT have issued a long term corporate bond with a coupon at 3.924%. For more details see https://www.investopoli.com/en/2018/06/21/bt-group-bond-xs1833076497/. Its current price is 103.73, so the actual return will be a bit less.


Some corporate bonds are tradable online. For example with HL but it seems they dont support this one.


So the offer could be genuine. The bond could be considered low risk (if you think BT is unlikely to go bust) but not zero risk. Clearly the bond isnt covered by FSCS, but the seller could be.