Savings Bond wasn't safe

smudgewoodybenji

Many years ago my in-laws had some kind of savings bond with the Bradford and Bingley.  They realised long after investing in it that there was a clause (not sure of the exact wording) but basically stated that at the end of the fixed term it was possible for Bradford and Bingley to make a discretionary deduction from the Principle amount (which could be a substantial amount) if the Bond had in effect made B&B loose money.   Is this kind of practice still happening.   I am looking at Shawbrook 5 year ISA (Bond)  but the 'B' word is making be worry that I may not get all my money back.   I know all about penalties for taking money out before the end of the 5 year term so it's not that that I am worried about.

Albermarle

The word 'bond' can mean many things. One reason it is often used in scams/dodgy investments.

It would be better if savings providers, like Shawbrook, just stuck to describing their fixed rate/fixed term products in that way, without the use of the word bond. Be assured you will get back your money + all the interest from 5 years.
Even in the very unlikely event that Shawbrook went bust, you are covered by up to £85K via the FSCS.

I presume the B&B bond was a product linked to the stock market in some way.

dunstonh

Many years ago my in-laws had some kind of savings bond with the Bradford and Bingley. 

Some people use the words "savings" and "investments" incorrectly
Some people use the word "bond" incorrectly. 
These are not helped by providers tending to use the words incorrectly as well.     

They realised long after investing in it that there was a clause (not sure of the exact wording) but basically stated that at the end of the fixed term it was possible for Bradford and Bingley to make a discretionary deduction from the Principle amount (which could be a substantial amount) if the Bond had in effect made B&B loose money.

A Fixed term deposit wouldn't have that (FTDs are often referred to as bonds).

However, B&B did issue a lot of SCARPs which were also marketed as bonds back in the day.  SCARPS are an investment product. Not a savings product.

SCARPS could pay out less than invested.

 Is this kind of practice still happening.

Yes. SCARPS still exist today.

  I am looking at Shawbrook 5 year ISA (Bond)  but the 'B' word is making be worry that I may not get all my money back. 

Forget the term bond as that can mean very very many different things.   Look at the terms as those are specific to the product issued.

However, in this case, the Shawbrook product is a fixed Rate cash ISA.    The addition of the word "bond" at the end is just marketing.   Indeed, they do not make reference to the word "bond" in some places.

wmb194

smudgewoodybenji said:

Many years ago my in-laws had some kind of savings bond with the Bradford and Bingley.  They realised long after investing in it that there was a clause (not sure of the exact wording) but basically stated that at the end of the fixed term it was possible for Bradford and Bingley to make a discretionary deduction from the Principle amount (which could be a substantial amount) if the Bond had in effect made B&B loose money.   Is this kind of practice still happening.   I am looking at Shawbrook 5 year ISA (Bond)  but the 'B' word is making be worry that I may not get all my money back.   I know all about penalties for taking money out before the end of the 5 year term so it's not that that I am worried about.

That doesn’t sound like any savings account I’ve ever known. It sounds like some kind of structured product that’s linked to the stockmarket. They were popular and fairly mainstream before the financial crisis but they’re rare now.