Athora Bond - clarity needed

BrianExbs

Over 10 years (when my father died), my Mother turned to her bank (HSBC) for advice on some of the money she received.   Approx 80K was put into an Offshore Athora Bond, where she thought the Capital would remain, and that a small monthly top up to her pension could be achieved,.   However HSBC today confirmed that the Capital is not guaranteed, and they they charge 1.75%, and because it is off shore the money is not protected by the ombudsman.   Further to that they are now advising the money be moved, but will be subject to 20% tax, and what ever decision my mother makes, HSBC will also charge circa £1500 for their advice to move, which seems odd when it was their advice in the first place.    But what does seem clear is the longer it stays off shore, the more tax will have to be paid.  Does all this sound correct, and is there anything that can be done to both reduce the Bank advice charges, and the amount of tax payable?

Albermarle

Do you know if there is still £80K there , or hopefully it has grown in 10 years ? + income generated ?
Just trying to judge if it was actually a bad investment or not .

dunstonh

However HSBC today confirmed that the Capital is not guaranteed, and they they charge 1.75%,

That is good news.   It would be horrible to find out that it had been languishing for 10 years in a guaranteed product (not that many existed 10 years ago on the investment side).

and because it is off shore the money is not protected by the ombudsman

That is not quite correct.  As it was put in place via advice, it does get FSCS protection if the advice was unsuitable.  However HSBC are not folding any time soon.

Further to that they are now advising the money be moved, but will be subject to 20% tax, and what ever decision my mother makes, 

There can be plenty of good reasons to surrender a bond into modern products.  A common move though is to do a bit each year to use the ISA and pension allowances.

HSBC will also charge circa £1500 for their advice to move, which seems odd when it was their advice in the first place.

Its not odd.  If you get someone out to do a job 10 years ago, do you expect not pay them again a decade later for a different job?

But what does seem clear is the longer it stays off shore, the more tax will have to be paid. 

Yes but it also gets gross roll up. Although that may be unnecessary if the ISA allowances can be used each year.

Does all this sound correct,

Insufficient information but we have been getting people out of bonds for almost a decade as they are not the tax wrapper they once were.  Still a place for them in some scenarios but changes to the dividend allowance and the increase in ISA allowance makes them a lot less attractive.  Pensions have come more into play as well.

and is there anything that can be done to both reduce the Bank advice charges

Dont use the bank for advice.      If advice is needed, then an IFA should be used.  If advice is not needed then don't use an adviser.

and the amount of tax payable?

Potentially but insufficient information to go on.

Marcon

dunstonh said:

However HSBC today confirmed that the Capital is not guaranteed, and they they charge 1.75%,

That is good news.   It would be horrible to find out that it had been languishing for 10 years in a guaranteed product (not that many existed 10 years ago on the investment side).

and because it is off shore the money is not protected by the ombudsman

That is not quite correct.  As it was put in place via advice, it does get FSCS protection if the advice was unsuitable.  However HSBC are not folding any time soon.

Further to that they are now advising the money be moved, but will be subject to 20% tax, and what ever decision my mother makes, 

There can be plenty of good reasons to surrender a bond into modern products.  A common move though is to do a bit each year to use the ISA and pension allowances.

HSBC will also charge circa £1500 for their advice to move, which seems odd when it was their advice in the first place.

Its not odd.  If you get someone out to do a job 10 years ago, do you expect not pay them again a decade later for a different job?

But what does seem clear is the longer it stays off shore, the more tax will have to be paid. 

Yes but it also gets gross roll up. Although that may be unnecessary if the ISA allowances can be used each year.

Does all this sound correct,

Insufficient information but we have been getting people out of bonds for almost a decade as they are not the tax wrapper they once were.  Still a place for them in some scenarios but changes to the dividend allowance and the increase in ISA allowance makes them a lot less attractive.  Pensions have come more into play as well.

and is there anything that can be done to both reduce the Bank advice charges

Dont use the bank for advice.      If advice is needed, then an IFA should be used.  If advice is not needed then don't use an adviser.

and the amount of tax payable?

Potentially but insufficient information to go on.

What a really clear and helpful answer. OP, if you aren't feeling better after reading it, read it again!

garmeg

Marcon said:

dunstonh said:

However HSBC today confirmed that the Capital is not guaranteed, and they they charge 1.75%,

That is good news.   It would be horrible to find out that it had been languishing for 10 years in a guaranteed product (not that many existed 10 years ago on the investment side).

and because it is off shore the money is not protected by the ombudsman

That is not quite correct.  As it was put in place via advice, it does get FSCS protection if the advice was unsuitable.  However HSBC are not folding any time soon.

Further to that they are now advising the money be moved, but will be subject to 20% tax, and what ever decision my mother makes, 

There can be plenty of good reasons to surrender a bond into modern products.  A common move though is to do a bit each year to use the ISA and pension allowances.

HSBC will also charge circa £1500 for their advice to move, which seems odd when it was their advice in the first place.

Its not odd.  If you get someone out to do a job 10 years ago, do you expect not pay them again a decade later for a different job?

But what does seem clear is the longer it stays off shore, the more tax will have to be paid. 

Yes but it also gets gross roll up. Although that may be unnecessary if the ISA allowances can be used each year.

Does all this sound correct,

Insufficient information but we have been getting people out of bonds for almost a decade as they are not the tax wrapper they once were.  Still a place for them in some scenarios but changes to the dividend allowance and the increase in ISA allowance makes them a lot less attractive.  Pensions have come more into play as well.

and is there anything that can be done to both reduce the Bank advice charges

Dont use the bank for advice.      If advice is needed, then an IFA should be used.  If advice is not needed then don't use an adviser.

and the amount of tax payable?

Potentially but insufficient information to go on.

What a really clear and helpful answer. OP, if you aren't feeling better after reading it, read it again!

@dunstonh  is a godsend to these forums.

BrianExbs

Albermarle said:

Do you know if there is still £80K there , or hopefully it has grown in 10 years ? + income generated ?
Just trying to judge if it was actually a bad investment or not .

There was a small £15 month income taken, which accounts for the reduction of around £1K.