The Corporate FAB builds on the firm’s existing retail flexible asset bond and is designed to offer better-than-bank returns to companies and capital growth over a flexible investment period through a choice of actively managed, low-risk investment funds.
The new bond is an open-ended, single premium life assurance bond which provides corporate investors with a diversified portfolio of cash assets that is regularly reviewed for security, rate and liquidity.
Corporate customers can invest lump sums of between £100,000 and £10m and can choose from a variable rate with immediate access, 30 day notice and 90 day notice funds.
Advisers can choose from three different commission structures of 0 per cent, 0.25 per cent and 0.1 per cent with commission given up added back to the rate for the customer.
The bond qualifies for The Financial Services Compensation Scheme which, the firm says, for insurance products provides better protection than deposit accounts for amounts in excess of £55,334.
The credit risk of assets held with in the fund is retained by the fund and therefore the customer.
The firm says the main driver for the launch was the change in the tax rules announced in the 2008 Budget regarding how corporates holding life bonds were taxed.
Previously if a corporate held a life bond, it was subject to life insurance tax rules but if it was onshore it did not get a corresponding tax credit which was not viable.
Under the new regime which took effect on April 1 this year, loan relationship rules apply offering corporates a tax credit for tax deducted as part of the bond, making it more advantageous for them to invest in life bonds.
Cardif Pinnacle head of group investment business Kathy Byrne says: “We thought this was a good opportunity to offer a cash-based product to corporates because most aren’t covered under the FSCS for deposits as it only applies to small corporates and in any case if you’ve got more than £50,000 you’re not covered anyway.
“We’re diversifying the portfolio so we don’t have more than 20 per cent with one counterparty and there’s peace of mind as we’re actively managing it, spreading the risk and reviewing which counterparty we’re using on a regular basis.”