Castle Trust - Revisited

Razoo

I found some previous MSE threads on Castle Trust that didn't exactly endorse them.

Does anyone have any updated views (good or bad)?

As interest rates plummet, Castle Trust are offering their 1-year Fortress Fixed Rate Bond at 2.10%.

I see they now claim to have the full FSCS cover of £85K payable to eligible investors (generally individuals and small businesses are eligible) and they have recently applied for a banking licence, which if granted should be effective around mid-2020.

I spoke to the FSCS and they confirmed that Castle Trust is a regulated member (Ref: 541910) and that the cover is now £85,000 per investor, rather than the £50,000 it was previously.

I note that the Fortress Fixed Rate Bond is described as a 'loan note', so I assume it's still not a financial product that will be covered by the FSCS, despite Castle Trust's confirmed membership and the information given to me by the FSCS? Certainly Castle Trust's description of their FSCS cover is somewhat vague, viz. "Are Castle Trust investments covered by the FSCS?

Castle Trust Capital plc (the entity from which you buy Fortress Bonds) is an investment firm that is authorised and regulated by the FCA and is a participant in the FSCS."
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Razoo

AnotherJoe

To me their wording looks like very clever wording that attempts to claim misleadingly but very well, that these investments are covered by the FSCS when actually, they are not. They don't simply state that the investments are covered, but they beat around the bush and talk about how castle trust itself is covered and (again, this is my opinion) hope that you come to the mistaken conclusion that therefore these "bonds" (another misleading word) are covered.
I believe if they were covered they would simply state they were, but they don't but instead waffle on abiyt the company itself being covered.
IMO this is the sort of weasel wording that the FCA need to crack down on because variants of it have already caused heartache for many investors in many failed "bonds" and companies.
If i were you I'd look elsewhere, you can get very close to 2.1 or even better elsewhere anyway, why take the risk?

Ps more detail here by a respected debunker of these type of schemes (nothing respected about me ) that also says they aren't covered
https://bondreview.co.uk/2018/01/26/castle-trust-corporate-loan-notes-covered-by-the-fscs/

SonOf

I spoke to the FSCS and they confirmed that Castle Trust is a regulated member (Ref: 541910) and that the cover is now £85,000 per investor, rather than the £50,000 it was previously.

That doesnt make the investment on offer protected by the FSCS.

I note that the Fortress Fixed Rate Bond is described as a 'loan note', so I assume it's still not a financial product that will be covered by the FSCS, despite Castle Trust's confirmed membership and the information given to me by the FSCS?

Correct. Loan notes are direct investments and do not get FSCS protection.

Alexland

As a general statement, if any provider has chosen not to make their product clear, and potentially cause you to misunderstand the extent of the FSCS protection, then draw your own conclusions about how they are operating their business...

AnotherJoe

One might also wish to consider the FSCS's correct but essentially wholly misleading answer. They apparently did the same regards LC&F.
Absolute ****wits have they learned nothing? (rhetorical question obviously)

Reaper

Razoo wrote: »

I spoke to the FSCS and they confirmed that Castle Trust is a regulated member (Ref: 541910) and that the cover is now £85,000 per investor, rather than the £50,000 it was previously.

Here's an article from way back in 2014 about it, as mentioned on previous threads.
https://www.telegraph.co.uk/finance/personalfinance/savings/11065151/Concerns-over-safety-of-2.25pc-savings-bond.html
The opinion of the experts is there is no cover, with one saying "This is blatantly a violation of the intention behind the FSCS – and it won't work".

The FSCS said "claims were dealt with on a case-by-case basis and the outcome would depend on the specific terms and conditions of the product."

The unwillingness of the FSCS to give a definitive yes/no in advance allows the company to keep claiming there is cover, but it would be a huge gamble to bet your savings on it.

DrSyn

The quick and easy way to tell:-

SAFE LOW RISK BONDS
Will be regulated investments where you can expect to get your money back.
You get them from either,
(a) NS&I, which is a loan to the UK goverment.
(b) A bank or building society covered by the FSCS protection. The present cover is £85000.

This product is not a savings account from a bank or a building society covered by the FSCS up to £85k, nor is it from NS&I. So it cannot be a safe low risk bond!

OTHER BONDS
These will be unregulated investments, where there is the potential loss of all your money.
So they should also mention somewhere there is risk to your money.
That is if the company is honest.

Bond Scams:- Occur in unregulated investments.


At the Castle Trust website for the Fortress Bonds , what do you find?

INVESTMENTS
(So the are telling you this is an investment product not a savings account.)

If you look through the, Frequently Asked Questions

Q. Are there any risks associated with investing in a Fortress Bond?

A. You risk losing capital should Castle Trust become insolvent.

Albermarle

You can get one year fix savings accounts with well known institutions with full £85K cover , currently paying 1.8% .
So why take any risk for a measly 0.3% extra.

Razoo

Albermarle wrote: »

You can get one year fix savings accounts with well known institutions with full £85K cover , currently paying 1.8% . So why take any risk for a measly 0.3% extra.

I don't intend taking any unnecessary risks - hence my research, including this thread.

With interest rates so depressing low (and seemingly on another race to the bottom), 2.1% against 1.8% represents a 16.7% interest rate enhancement, so not really "measly" in that context.

As Mr Tesco is prone to utter, "Every little helps!"

However, I won't be investing in anything that risks my capital.

Perhaps Castle Trust will offer some worthwhile savings accounts when/if they are granted their banking licence.
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Razoo

Alexland

Razoo wrote: »

Perhaps Castle Trust will offer some worthwhile savings accounts when/if they are granted their banking licence.

Perhaps LC&F will launch a Lifetime ISA to help first time buyers....