Lloyds fixed rate bond SCAM

celica56

Asked on Google 50k to invest, guy phoned me, baffled me with financial speak and said I could get 7%pa with Lloyds fixed rate bond.
He then emailed me with all the details. In the previous phone call he told me he would give me an ISIN number which he told me to Google.
XS0503834821 is the number
So convincing.

AnotherJoe

You should NEVER ask on Google (or Facebook) anything about best rate, best investment or anything like that. NEVER

The first set of results will be a mixture of scams and super high risk schemes that look low risk.

Where "super high risk" means  "might as well be a scam".

You probably have a touching faith in these large companies not to show you scams but it just doesn't work that way, as long as they get paid they'll display them. Martin Lewis pretty much had to take Facebook to court to get them to stop showing fake Facebook ads purporting to show him sponsoring variuos fraudulent schemes.  

For a search like yours use a site like this and other similar well known financial websites,  and even then dont reply to ads they might display,  since often the ads go through so many middlemen the sites dont know what ads they are showing.

dunstonh

He then emailed me with all the details. In the previous phone call he told me he would give me an ISIN number which he told me to Google.

There are a number of Lloyds bank bonds and all of them have an ISIN number.     They exist and are totally valid and correct. 

However, they are not savings products and are not even retail investment products.  They are corporate bonds.  They can be traded in a similar way to shares.  

A very common scam is that you take a high street name and look at the bonds they have expiring in the coming years.  You then try and market them to low knowledge consumers as a fixed-term deposit (by calling them bonds).     The mug consumer looks it up and sees the bond is real.  So, they think its all hunky-dory.    However, the money paid to the scammer never buys that bond.   They run off with the money. 

It is against FCA rules to market unregulated investments to mainstream consumers.  However, the scammers are not FCA regulated.  So, they can do what they want.  And as they are scammers, they will do things that are unlawful as their aim is to scam you out of your money.

A variation of the above is for scammers to clone genuine company name and fool you into thinking you are dealing with a major honest brand.  

Please can you post the site you saw so we can report them to the FCA to get a consumer warning up (not that consumers read the warnings but it will include an Action Fraud report)

ColdIron

You've already told us

https://forums.moneysavingexpert.com/discussion/comment/77102607#Comment_77102607

Why did you give you details to an anonymous advert on Google that you thought "seems too good to be true"?

There is a high possibility that you are on a 'suckers list' and will receive many more 'opportunities' to invest from various parties. You have learned a valuable lesson and were lucky it has cost you nothing. Many other people with similar levels of naivety as you have lost significant sums of money

John_

That ISIN is a Lloyd’s TSB MTN redeeming in April 2025, with a coupon of 7.625%. It’s subordinated debt, issued inApril 2010, in £750M.

Last trader price 120.204, giving a yield to maturity of 3.13%.

As above, though, “buying” from someone over the phone could well be just you sending money to a scammer, so don’t do it.

bowlhead99

celica56 said:

Asked on Google 50k to invest, guy phoned me, baffled me with financial speak and said I could get 7%pa with Lloyds fixed rate bond.
He then emailed me with all the details. In the previous phone call he told me he would give me an ISIN number which he told me to Google.
XS050383 is the number.
So convincing.

If you are easily baffled with financial speak you will be easy prey for scam artists like the one who called you. Stick to comparison tables from respected companies such as moneysupermarket or the like. People who cold call you with financial investment offers are definitely scammers because the FCA doesn't allow that. People who call you after you enquire online about their products are not always scammers, but often are, especially when giving you a 'too good to be true' offer. Either the product may be fake, or the product may be genuine but sold in a misleading way which gets them a lot of commission and you nursing heavy losses, or they just intend to pocket your money and not even give you a product and then list another website on google to hide behind.

The full ISIN number is XS0503834821 and relates to a Lloyds fixed bond which the bank issued in 2010, maturing in April 2025. It is not a deposit account, it is just a certificate for part of a £740m fundraising debt that Lloyds owe, having borrowed it as part of £50 billion of borrowings under their medium-term loan note program at that time.  If you had bought the bonds at launch, you would have got about 7.7% interest from them (the official 'coupon' rate is 7.625%). However, you did not buy them at launch and don't have a time machine; but anyone can buy them second-hand through a stockbroker.  https://www.londonstockexchange.com/exchange/prices-and-markets/retail-bonds/company-summary/XS0503834821ZZGBPUKCP.html?lang=en

Unfortunately the offer price on the stock market as seen on that link is £1.245 per £1 of nominal value, so if you spent £50k buying them you would only get around £40,000 nominal value of bonds. Lloyds which is the company that has the debt would then pay out 7.625% of that £40k each year (about £3k per year, split into two six-monthly chunks). Then in April 2025 they would pay off the £40k, for £40k. 

So if you invested today you would get about £3k per year on your £50k investment (6%) and then lose £10k when it matures and only pays you back £40k instead of £50k. So after 5 years and £15k of interest receipts, but losing the £10k difference between the £50k invested and the £40k payout on maturity, you would have made about £5k overall profit (which works out about 2% a year, and doesn't compound) even though you have been receiving and paying tax on £3k a year. 

It is not a deposit in the bank's vaults with FSCS protection, instead it is effectively a loan to the bank, and if they fall upon hard times and don't have enough to pay the interest each year or the hundreds of millions of debt in 2025, they may not pay you any of the promised interest or capital, and as there is no FSCS protection you would just get nothing.  That's why the headline yield to maturity is over 2% despite bank base rates being 0.1%.  Because lenders to the bank are taking a risk that they won't get it back - just like when the bank gives loans or mortgages to customers they risk not getting it back.

I expect the jolly nice chap on the phone told you the bond paid 7% instead of the truth that it would be an effective 2%, and only if the bank stayed solvent. He gave the ISIN number so that when you Google it you could verify that Lloyds had indeed issued some sort of bond maturing in 2025 with a headline rate of 7%, knowing that you are easily confused by baffling financial speak. He hopes you are a sucker so that you will give him £50k.

He will then either:
(a) take a huge commission for buying you the bond, duping you into buying a product with a low effective yield at high cost, because he has no morals; 
or more likely
(b) pocket your £50k and run off, because he has no morals

If you have phonecalls with people like this, you risk losing all your money. Even by giving them your phone number so that they can call you with offers, you will probably have been put on a 'suckers list' which they will sell to other con artists who will bother you with ever more tempting offers which seem grounded in some sort of reality (e.g. there is something you can google) but are just preying on your greed and naivety.

celica56

dunstonh said:

He then emailed me with all the details. In the previous phone call he told me he would give me an ISIN number which he told me to Google.

There are a number of Lloyds bank bonds and all of them have an ISIN number.     They exist and are totally valid and correct. 

However, they are not savings products and are not even retail investment products.  They are corporate bonds.  They can be traded in a similar way to shares.  

A very common scam is that you take a high street name and look at the bonds they have expiring in the coming years.  You then try and market them to low knowledge consumers as a fixed-term deposit (by calling them bonds).     The mug consumer looks it up and sees the bond is real.  So, they think its all hunky-dory.    However, the money paid to the scammer never buys that bond.   They run off with the money. 

It is against FCA rules to market unregulated investments to mainstream consumers.  However, the scammers are not FCA regulated.  So, they can do what they want.  And as they are scammers, they will do things that are unlawful as their aim is to scam you out of your money.

A variation of the above is for scammers to clone genuine company name and fool you into thinking you are dealing with a major honest brand.  

Please can you post the site you saw so we can report them to the FCA to get a consumer warning up (not that consumers read the warnings but it will include an Action Fraud report)

Got no details of the site, tried to find it but there are numerous site's which all look alike asking for levels of risk, how much to invest and for how long.
However in the email he said his company was Thomas AST Capital management of London.

dunstonh

However in the email he said his company was Thomas AST Capital management of London.

Looks like a clone scam

https://www.fca.org.uk/consumers/avoid-scams-unauthorised-firms/clone-firms-individuals