Tempo FTSE 100 Memory Interest Deposit Plan: May 2024
The plan is a 5-year, fixed term structured deposit. The plan will pay a conditional, stock market linked, fixed rate of interest of 5.20% each year, payable annually throughout the deposit term for each year at which the FTSE 100 closes at or above 98% of the start level on the annual interest dates. The FTSE 100 does not need to rise – it simply needs to close at or above the start level at each annual interest payment date. The plan includes an innovative ‘memory’ feature. If an interest payment is missed due to the closing level of the FTSE 100 being below the level needed on an annual interest date, the plan remembers - and the missed interest can potentially be paid on a future annual interest date. On the next annual interest date at which the FTSE 100 closes at or above 98% of the start level, any missed interest will be paid, together with the interest due on that annual interest date. The plan is only available on an Advised basis.
- Market / index link: FTSE 100
- Counterparty: Royal Bank of Canada
- Investment term: 5 years
- Kick-out / Early maturity: No
- Barrier type: Not Applicable (Structured Deposit)
- Barrier level: N/A
The closing date for ISA transfer applications is 19 April 2024.
Product Literature & Forms
You should always read the relevant plan brochure and any other plan documentation, for full details of the plan’s features, including any risks, and the terms and conditions. In addition to the plan brochure and terms and conditions there are other important documents, including a Key Information Document ('KID'), that you should consider, before deciding to invest in the plan.
If you do not fully understand the risks or are unsure as to the suitability of the investment, please contact us
How to Invest?
Please note: This plan is available on an advised basis only. If you are interested in this plan, please telephone us on 01639 860111 to arrange a free consultation
1 Call for a free initial telephone consultation. If you wish to progress the process of the product purchase, the regulatory process of ‘advice’ must commence.
2 The completion of a financial review – which will confirm details of your income/capital and investment needs and experience
3 The completion of a risk profiler - which will help to measure your attitude to risk.
This process will enable ‘advice’ to be provided in relation to the suitability of the product to meet with your needs. The fee for this service and process is 1.5% (subject to a minimum fee of £300) for focused advice – which is focused and narrowed to the suitability of the structured product you want to purchase.
Further Information
The plan is a 5-year, fixed term structured deposit. The plan will pay a conditional, stock market linked, fixed rate of interest of 5.20% each year, payable annually throughout the deposit term for each year at which the FTSE 100 closes at or above 98% of the start level on the annual interest dates. The FTSE 100 does not need to rise – it simply needs to close at or above the start level at each annual interest payment date.
The plan includes an innovative ‘memory’ feature. If an interest payment is missed due to the closing level of the FTSE 100 being below the level needed on an annual interest date, the plan remembers - and the missed interest can potentially be paid on a future annual interest date. On the next annual interest date at which the FTSE 100 closes at or above 98% of the start level, any missed interest will be paid, together with the interest due on that annual interest date.
The minimum AER of the plan is 0.00%. The plan does not include a minimum level of interest. The maximum potential AER of the plan is 5.20%.
Even though the conditional, stock market linked interest is linked to the level of the FTSE 100, the repayment of money in the plan is not subject to stock market risk at the end of the deposit term.
The conditional, stock market linked interest depends on the level of the FTSE 100 on each annual interest date. In addition, both the potential interest and repayment of money in the plan depend on the financial stability of the Deposit Taker Bank throughout the deposit term.
Interest will not be paid for any year at which the FTSE 100 closes below the level needed on the annual interest date – but the plan includes a ‘memory’ feature, which means that any missed interest payments might be paid on a future annual interest date. No interest will be paid if the FTSE 100 closes below the level needed on all of the annual interest dates. It is important that you consider the outlook for the FTSE 100. The plan is designed for savers who have a neutral or positive view of the future level of the FTSE 100, over the deposit term.
The plan depends on the financial stability of the Deposit Taker Bank: the potential interest and repayment of money in the plan depend on the financial stability of the Deposit Taker Bank throughout the deposit term. The Deposit Taker Bank for the plan is Royal Bank of Canada, London Branch. You can find information about Royal Bank of Canada on pages 10 and 14 of the Brochure. Please see page 12 of the Brochure for an explanation of what we mean by ‘financial stability’. The plan is covered by the Financial Services Compensation Scheme (‘FSCS’), for eligible claimants, within FSCS claim limits. Please see page 15 of the Brochure for more information about the FSCS
Don’t forget the risks
All investments carry risk. It is identifying those risks, understanding how they may affect an investment and assessing whether an investment is suitable for your circumstances that is important.
The potential returns of most structured products and repaying the money invested are usually linked to the level of a stock market index and also depend on the financial stability of the issuer and counterparty bank. You should only consider investing if you understand and accept the risk of losing some or all of any money invested.
You should always read the relevant plan brochure and any other plan documentation, for full details of a plan’s features, including any risks, and the terms and conditions. In addition to the plan brochure and terms and conditions there are other important documents, including a Key Information Document (‘KID’), that you should consider, before deciding to invest in a plan.
Structured products should only be considered as part of a diversified and balanced portfolio.
Below is a summary of some of the main risks usually associated with an investment in structured products plans:
Market risk to potential returns
Whether or not a plan generates the potential returns for investors usually depends on the closing level of the relevant index on the relevant dates for the plan, i.e. the kick-out anniversary dates for kick-out products; the early maturity dates and end dates for growth products; the annual income dates for income products.
If the index closes below the level needed, for the plan or plan options chosen, on all of the relevant dates, the plan or plan options will not generate a return.
Market risk to repayment of money invested in 'Capital-at-Risk' plans
If the closing level of the relevant index is below the level needed on all of the kick-out anniversary dates or early maturity dates, if relevant for the plan or plan options chosen, and on the end date, repaying the money invested at maturity will usually depend on the closing level of the index on the end date..
Different structured products use different types of protection barriers. Some products use barriers that are observed every day that can therefore be breached on any day during the investment term, while some products use barriers that are only observed at the end of the investment term and that cannot therefore be breached during the investment term.
Market risk to the repayment of money invested on the end date will depend on the type of barrier and its level.
For example, for a product with an end of term barrier, set at 60% of the start level, if the index for the plan closes at or above 60% of the start level, on the end date, money invested will be repaid in full (less any agreed adviser fees and withdrawals). However, if on the end date the index closes below 60% of the start level, the amount of money repaid (less any agreed adviser fees and withdrawals) will be reduced by the amount that the index has fallen. For example, if the index has fallen by 45%, the repayment of money invested will be reduced by 45% (meaning that investors will get 55% of their investment back).
'Protected' types of structured products
Some structured product plans are designed so that they are 100% protected from stock market risk at the end date.
It is important to understand that even if a structured product plan is designed with 100% protection from stock market risk, at the end date, it will still usually have issuer and counterparty bank risk. In other words, both the potential returns of the plan and repaying the money invested at the end date will depend on the financial stability of the issuer and counterparty bank. If the issuer and counterparty bank become insolvent, or similar, or fail to be able to meet their obligations, it is likely that investors will receive back less than they invested.
Issuer and counterparty bank risk
Both the potential returns and repaying the money invested of most structured products depend on the financial stability of the issuer and counterparty bank. If the issuer and counterparty bank become insolvent, or similar, or fail to be able to meet their obligations, it is likely that investors will receive back less than they invested.
Financial Services Compensation Scheme ('FSCS') protection
It is important to understand that it is not usually possible to claim under the Financial Services Compensation Scheme if the issuer and counterparty bank fail to meet their obligations or if the stock market index that a plan links to falls.
Structured deposits
Structured deposit plans are deposit-based and will usually be fully protected from stock market risk at the end date and also benefit from the protection of the Financial Services Compensation Scheme, if the bank or building society is a licensed UK deposit taker.