Following the recent market coverage of the banning of David M Aaron Personal Financial Planners, the industry regulator, the Financial Services Authority is on the hunt again. Precipice bonds have not been performing well and the FSA believes that many investors have purchased without knowing the real risks involved. They want to make sure that any advisers selling the bonds make potential investors aware of the downside, as well as the possible gains.
Many investors have lost a considerable amount of the capital they invested and many are still waiting for their investments to mature.
Our View
Precipice Bonds or SCARPS as they are also known, are investments that promise large income or growth returns plus a return of capital, if certain markets rise or do not fall below a certain level. Whilst the investments can be suitable, there is a definite degree of risk involved. We believe that if investors knew the real risks, they would not invest.
If you have investments of this nature and are worried about them, please do get in touch with us. We can give you our views and explain the levels of risk involved. We can also provide you with advice, if you need it.