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Protection back on L&G structured plan

Legal & General has restored 100 per cent capital protection on one of its Lehman-exposed structured products but investors will have to forego some potential growth.

Market-maker Abbey National Treasury Services has realigned the protected capital and growth plan 4 to offer a 20 per cent minimum return at maturity, or if higher 40 per cent of FTSE 100 growth. It previously promised to pay a 25 per cent minimum return, or, if higher, 50 per cent of FTSE 100 growth. If the FTSE is below 5,229.60 at maturity in July 2011, 80 per cent capital protection will kick in with the 20 per cent minimum return, so investors would get 100 per cent of the original investment.

No changes have been made to the remaining four counterparties – Barclays, Yorkshire, Citigroup Funding Incorporated and Dresdner Bank.

In December 2008, Legal & General wrote to over 2,000 clients with more than £33m invested in its Lehman-backed accelerated growth investment plan 2 and protected capital and growth plan 4, warning up to 20 per cent of capital protection may be at risk.

A total of 1,030 clients had £21m in the protected capital and growth plan.

L&G says it has so far been unable to renegotiate capital protection on the accelerated growth plan 2.

Chelsea Financial Services head of investment products Matthew Woodbridge says: “Clients will offset some potential upside for the peace of mind that they will get all their cap- ital back. If you asked some of the clients with other Lehman-exposed plans, they would take that with both hands.”

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  1. I have only just found this article but would like to update you that L&G have written in the last week to say that because of Lehmans the capital (that was supposed to be protected) will only pay back 20% of the total. This seems to contradict this article.

    Looks like me as an investor you to have been duped!

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