The company has specialisd in self-investment since 1988 and is known for its pension and annuity products. This is its first non-pension product and it provides a wide investment choice without being caught by the tax charges applying to highly personalised bonds.
The Personal Portfolio Bond legislation is an anti-avoidance measure which imposes a yearly tax charge on the owners of life assurance policies that allow investments to be selected by the investor. London & Colonial developed the offshore open bond with these regulations in mind and obtained advice from a senior barrister, who confirmed that the bond does not fall within the PPB rules.
FTSE 100 companies can be accessed through London & Colonial’s FTSE 100 fund. This is split into different classes of unit, each representing the shares of a company on the index. London & Colonial’s legal adviser has said that to ensure the bond does not fall within the PPB rules, investors should hold more than one class of unit.
Third-party investment managers can also be appointed on a discretionary, advisory or execution-only basis.
The bond has transparent charges, no exit penalties and the payment for advice is catered for through customer agreed remuneration. The company emphasises that service is important for self-investment and says that investors will speak to one person, rather than a range of people in a call centre.
However, London & Colonial’s legal opinion on the FTSE 100 fund shows there is a fine line in relation to the PPB rules.