What is an Autopilot Bond?
An Autopilot Bond is an investment bond sold by NatWest and its parent Bank the Royal Bank of Scotland and was marketed as being a structured deposit investment.
It is a complex product, promising to pay interest on the initial deposit based on the performance of several stock markets i.e. FTSE 100, as well as commodity and property markets, or a Reserve Asset of cash. They were sold between 2009 and 2013, and there were several ‘issues’ available. Each issue based the performance on different market sectors.
The Bonds were designed to return your original deposit, as a minimum, as long as they were held until maturity. The Bonds were also protected by the Financial Services Compensation Scheme.
Due to the above, the Bonds were deemed ‘low risk’ as the money was not being directly invested into the financial markets, as well as the capital not being at risk. If the markets were to fall, you would have received the initial deposit back at the end of the term when the product matured.
Often, the potential benefits were capped so while the market may grow you would only see the benefit up to a set percentage. Also, as you would not be investing directly into the stock markets, you would not benefit from dividend payments as you would if you had invested in shares directly.
It is possible that at the end of the Bond’s term, your initial deposit would not have made a profit, or the profit it has made is very low, meaning it is likely your money would have worked better for you in a regular savings account.
If you wanted to close your account early or wanted access to your funds, you may face large penalties. Your money is ‘locked away’, and you cannot withdraw money as you could from some regular savings accounts.
NatWest and the Royal Bank of Scotland stopped selling Autopilot Bonds in 2013 after talks with the Financial Conduct Authority.
They revealed that they would be contacting 24,000 of its customers, who were sold the Autopilot Bond through their Financial Planning and Advice Service, following their admission that the Autopilot Bonds were mis-sold. The customers that are being contacted will be offered the option to switch to a fixed interest rate, close their Autopilot Bond and get an interest payment or remain on the Autopilot Bond with its current terms and conditions if they are happy with it.
How can an Autopilot Bond be mis-sold?
Autopilot Bonds are highly complex products that were supposed to be for ‘Private Bankers’. These are customers who are classed as being high-net-worth individuals, with high levels of income or assets. However, the Banks advisors were promoting these products to ‘personal banking’ customers, who wanted low risk investments with a guaranteed return.
RBS has admitted that thousands of these products were mis-sold to ‘personal banking’ customers. They have advised that this is due to the nature of the products being complex products. Autopilot Bonds were offered to people who may not have been able to understand the Bond, or they may not have had the necessary experience in investments, or the Bond was not appropriately explained to them.
With a lack of experience in investments, customers had no way of knowing whether the investment was sound or not. This meant that they placed their trust in the Bank and its advisors, believing they would be acting in the customers best interests.
However, the advisors did not fully explain the risks associated with Autopilot Bonds, and were known to advise that there was little to no risk.
Despite being presented to customers as being ‘independent’, the Banks advisors would use high pressure techniques to secure an investment.
What does this mean for me?
When your Autopilot Bond matures (if it has yet to do so), you may have expected to find that your original capital has grown, however you may also find that you have gained little to no increase on your original capital, in opposition to what you were led to believe when you invested in the Autopilot Bond.
If you were sold an Autopilot Bond product by RBS or NatWest, and feel it has not performed as you were led to believe it would, then we believe it is paramount that you seek appropriate, professional advice before making a claim. As with many bank-led review schemes, the complaints procedure may appear straight forward, however in our experience it never is.
We have had significant success challenging poor offers and getting significant uplifts for our clients. We have challenged RBS and NatWest on a number of occasions for sub-par offers of redress, successfully overturning an offer that a customer was dissatisfied with under the RBS-led review.
However, we have found that if clients had sought specific, professional advice before making a claim themselves, important aspects for the claim could have been raised in the first instance, which in turn could have yielded a better outcome.
How can we help?
Here at Cooper Stern we are experts at advising individuals and businesses on potentially mis-sold complex financial products.
We offer a no-obligation initial review of a potential Autopilot Bond claim, and advise on the strengths and weaknesses of making a claim. Following this, we work on a no-win no-fee basis meaning we will only take forward claims we believe have a strong chance of succeeding.
If you feel you have been mis-sold an Autopilot Bond and want us to look into the matter for you please get in touch. You can fill in our simple online enquiry form and one of our expert advisors will call you back to discuss your mis-sold financial product in more detail. Alternatively, you can call us on 01204 328 287 and we will be more than happy to discuss your queries.