# ACC Tracker Bond



## Daddy (6 Nov 2006)

There was a story apparently in yesterday's Sunday Tribune about a tracker bond product that attracted millions of euro's a few years ago that is now languishing in the doldrums.   Can anyone provide a link to it ?


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## Wilkes (6 Nov 2006)

No links to Sun Tribune but read the piece by Bill Tyson. Well written and researched looks pretty awful for ACC but the story also refers to unauthorised intermediaries getting money, must check out further


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## ClubMan (6 Nov 2006)

Concern over ACC's 500m lending frenzy

You need to be registered to access and registration is free for a trial period.


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## DirtyH2O (6 Nov 2006)

I know several people who invested 100K in 80%, 90% & 100% capital guarantee funds (% depends on version) with them where the initial 100K was borrowed and they only pay the interest for the five years until fund matures. I was gobsmacked just hearing how people willingly borrow multiple times their salaries along with big mortgages and the rest.


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## Wilkes (6 Nov 2006)

This gets more interesting when you look more closely. Let me try a hypothesis; if High Net Worth and generally well off people, the type Banks only lend to, borrowed in hundreds of millions of Euro does it stand to reason that they might have been mis-sold in large numbers?

Look at it this way - if people were told that the construct was effectively a sexed up deposit account, or that the bank stood to make maybe 4% to 6% on the twist, would they have borrowed so heavily? Most investors who borrow heavily I would have thought do so to seriously outperform the cost of borrowing. That has not happened despite the strong equity environment. 

Plenty of others are in the same boat. Geared trackers were also being sold heavily by IIB but the Sunday Tribune revelation of half a billion by ACC is mind boggling.

Oddly the performance tables on the ACC site no longer operate http://www.accbank.ie/. Neither is Financial Engineering Network advertising its central involvement. http://www.fen.ie/ I recall at the time it was boasting of sales of something like Euro 150 million of this construction from its clientbase and mostly through Self Administered Pension Schemes where the investment is made by an unregulated vehicle known as the Delta Unit Trust administered by a sister company ITC ltd. Its not as if firms selling this type of construction were unaware of concerns being raised http://www.unison.ie/business/personalfinance/stories.php?ca=257&si=1083698


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## Daddy (7 Nov 2006)

Clubman - thanks for posting the link.

To All - The article states ' The Financial Regulator warned against geared trackers in Nov 2003, not long after ACC Bank's first bond, but before two others reaped record sales in 2004'.

There are new tracker bonds doing the rounds all the time most current being the Titan Bond.   Is this bond and the others which guarantee 90% or 100% capital security after 6 years the very same kettle of fish as what the ACC promoted at the time.   And if they are I presume the Finacial Regulator's warning would still hold.

Thanks


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## Wilkes (7 Nov 2006)

I wonder was the ISFRA warning a sufficient response? It seemed to suggest that these were ok for High Net Worth but surely a poor construction is poor regardless of the investor or am I being too fussy? It would be great to hear Brendan's view with his position on The Consumer Panel and what about you Clubman, what is your take?


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## ClubMan (7 Nov 2006)

I don't understand the product so, on that basis, would not invest in it. In any case I don't like tracker bonds as a rule, opaque charging stuctures, fixed investment terms etc. If there is something misleading or illegal in the construction and marketing of such products (not saying that this is necessarily the case here) then _IFSRA _should act to protect consumers. Where a product and its marketing is otherwise compliant with the relevant rules and regulations then I don't think that _IFSRA _should seek to protect some people from their own stupidity or greed though.


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## Wilkes (7 Nov 2006)

Yeah I get your point on mis-buying and the onus on investors but where there were no specific rules related to trackers and after a general warning about geared versions especially the comments of a noted Actuary like Brian Woods (see Indo article), what about the duty of care between banks and their customers and "independent" advisors like FEN and its clients?


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## Riddler (11 Nov 2006)

Interesting question you pose Wilkes...duty of care. Seems as is the duty stops where the Regulator says its ok. Which is wee bit disconcerting given that the comsumer protection mandate is subordinate to ensuring soundness of banks. 

However some banks do aspire to a duty of care which they even publicise and codify to show what good corporate citizens they are : such as Acc's parent Rabo here:
[broken link removed] 

Interesting isn't it how such corporate aspirations frequently ring hollow down the hallways of commercial reality. So is this just another case of corporate irresponsibility tapping into consumer naivety...probably.


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## DirtyH2O (11 Dec 2006)

Some interesting articles for anyone interested in tracker bonds and ACC in particular from yesterdays Post.

[broken link removed]
[broken link removed]
[broken link removed]

Whaterver the pros and cons about geared direct investment in equities, adding mngt fees and capped returns seems to make these type of products pointless in my opinion.


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## oldtimer (11 Dec 2006)

Don't mention the words 'tracker bonds' to me. I invested in two tracker bonds with Northern Rock in 2001 for five years, capital guarantee etc etc. (half the money in good deposit rate for two years - the other half in tracker bond). Would have been better putting the money on deposit at 2%. They have just matured - gain derisory.


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## Brian_M (11 Dec 2006)

Similar story on the ACC Bank geared tracker bonds by Niall Brady in yesterday's Sunday Tribune which gives customer testaments . You need to select paper edition 11/12/06 and do a query for ACC. You also need to set up a free log-in username.


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## roland (11 Dec 2006)

oldtimer, 

If you wanted a risk-free deposit return, then presumably you would have put all your money in a deposit account. Presumably you didn't do that as you wanted a higher return on some of your money. Presumably you understood that to achieve higher return, you were taking on some risk? It sounds like the risk didn't pay off? What's the problem?


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