Helvetia Wealth ?

Please contact the company directly should you require further information.
 
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This ad which appears in the Irish Times today appears to me to be in gross breach of the Consumer Protection Code.

The headline is "8% growth guaranteed" . But it is not possible to get any of the details of the product in the ad or on the website without registering.

There is one thing quite sure. This product is not paying 8% interest as the ordinary consumer understands it and so is misleading.

I have complained it to the Financial Regulator.

Brendan
 
Anybody able to scan, host and link to the ad in question? Or email a scan to Brendan and we/I will host it.
 
It reminds me of the Ben Affleck movie - 'Boiler Room' - good show, don't touch the investment with a barge pool.
 
It's a full page ad, but with very little text, so here goes...

8% Growth.
Guaranteed.

That's an eye-opener

Guaranteed 8% Coupon
Euro Medium-Term NOte(EMTN)

If you have money to set aside for 2 years,and you want to see 8% growth per annum,you could be one of the first private investors in this conditional capital Guaraneed bond.

+Guaranteed 8% coupon for two years
+Guaranteed by an aa-rated bank(Voted Euromoney's "Best Global Bank 2006")
+Only available to Helvetia Wealth Clients
+No redemption or penalty fees after 18 months
+Maturity 3 to 7 years
+Daily liquidity and listed
+Closing date 28th February 2007


Helvetia Wealth(Liechtenstein) AG is authorised and regulated by the FMA. It is a Swiss and Liechhtenstein-based Wealth Creation and Asset Management Company. The company is authorised to operate in Ireland , Germany, Sweden and the UK.

This document, which constitutes a financial promotion, has been approved by Helvetia which is authorised and regulated by the FMA.
Click to expand...
 
It will be very interesting to see how long it takes the Financial Regulator to deal with this.

My guess is that Helvetia will have attracted a lot of deposits before anything is done.

It seems to have first appeared last Sunday and no action has been taken yet.

Brendan
 
I noticed them yesterday, they have advertising banners on examiner.ie, business section
 
No -- it seems to be akin to a bond rather than a deposit account.

3-5 year maturity would explain how they can "guarantee" a return only for first 2 years. Hard to square that with possibility of redemption after 18 months though. I guess the underlying value of the coupon may fall though, so you might get the 8% p.a. return, but could end up with just your capital back when you add everything up (hence the conditional capital guarantee whatever that means.).
 
with regard to "car"...under "passporting" through the MiFID directive, a maximum harmonisation EU directive, all financial service providers have to confirm to the host country rules, this would be Germany in thier case (have a german based office) where this is not a prequisite.

Paying a coupon of 8% means just that, an annual coupon of 8%, 8 euros for every 100 invested. Nothing to say that "car" must be published, as outlined by MiFID. It is a part of our new "Consumer Protection Code" but this doesn't operate cross border.

Also, an EMTN paying 8% coupon is totally plausible, guaranteed as it is linked through a credit linked note (ie a wrapped mtn and cds). It is high, as the spread appears large over the floating 2y swap rate.

Would wonder as to the MTM (market price of this Medium Term Note (MTN) )...might not be too liquid and may be overly sensitive to a change in rates through their price, whihc would make early encashment a big loss maker...

if you want to enquire further on this, as them for the ISIN and RIC, you can then confirm all details through any of the rating agencys or market data sys.

Hope that helps.
 
babytooth said:
Also, an EMTN paying 8% coupon is totally plausible, guaranteed as it is linked through a credit linked note (ie a wrapped mtn and cds). It is high, as the spread appears large over the floating 2y swap rate.

Hope that helps.
Click to expand...

Where did you get this from?
 
My understanding of the Helvetia offering is as follows:
  • The 8% coupon is in years 1 and 2 only.
  • The maturity of the bond is 3 to 7 years
  • The 8% return to Irish investors is subject to marginal tax and PRSA and Health levy, thus for top rate tax payers a tax hit of 47%. This is not a 23% "exit tax" product.
  • It is not clear what is paid post 2 years, but surely likely to be less than 8%. Seems like the old "three card trick" used in the past by some With Profits contracts, by front-loading returns into the first 2 years.
 
I am surprised that Helvetia's website does not fully explain the product. You have to talk to one of their advisor to get full details - perhaps thats how they operate in Switzerland.

In general I believe that we should welcome the fact that foreign firms are now looking to sell product into Ireland on a passported basis especially since the range of product on offer in Ireland is quite limited.

Of course we should look closely as any product whether offered by an Irish firm or an overseas firm. Its just a pity that many people seem much more wary of these types of financial products than of property. If Helvetia had advertised an 8% yield on East European property would anybody have batted an eyelid - at least this product does not involve any form of gearing by the investor?

Would be interesting to raise with the Financial regulator if the normal €15,000 deposit protection would apply in this case if Helvetia defaulted.

I suspect that the Helvetia product is similar to some of the yield enhancing products sold in places like Germany when interest rates fell to around 2%. These are a type of structured deposit with built in call features. As I understand it the investor the high initial coupon is counterbalanced by the interest rate vol that the Bank gets.

Would be interesting to see what information Helvetia provide - you would expect full disclosure of the types of payoffs that would apply in various scenarios.
 
Maybe the Helvetia representative who posted earlier could take this opportunity to explain the product here on AAM?
 
I spoke about the status of the ad to the Financial Regulator's information section.

They do not have to comply with the Consumer Protection Code as it is a MiFid Product.

However, they do have to comply with the advertising guidelines in the Handbook for Investment and Stockbroking Firms ( published in 2000)

This apparently has very specific rules about the use of the term "guaranteed".

I have to say that I am not optimistic. General Principle 1.3 of these guidelines is that an ad must be fair and not misleading. The FR rejected my complaint that the BCP Quadruple Growth Bond was unfair and misleading although it never paid anyone quadruple growth of their investment.

They will probably also reject my complaint that "8% guaranteed" is unfair and misleading.

But unfortunately, the confidentiality obligations, means that we will never know the outcome.

Brendan
 
In my experience the IFSRA consumer complaints process is a joke and certainly not consumer friendly. They just quote tracts of legalese from section something or other and hope you go away. If you persist something may happen but, as you say, usually you will never know. I wouldn't bother complaining again. It took me about four attempts to convince them that a certain bank's claim that they were offering the best demand deposit rate was bogus even though it was a completely cut and dried case of misleading financial advertising. :(
 
Brendan said:
The FR rejected my complaint that the BCP Quadruple Growth Bond was unfair and misleading although it never paid anyone quadruple growth of their investment.
Click to expand...

Maybe you had some influence - Ch. 2, Par. 1 of IFSRA's 2006 Consumer Protection Code says: "A regulated entity must ensure that the name of a product or service which it provides is not misleading in terms of the benefits that the product or service can deliver."
 
Hi gonk

I made a lot of submissions to IFSRA on the code and lots of complaints about tracker bonds. The codes reflect some of my points. They are barred from discussing complaints with members of the public so it feels as if they are doing nothing. One can only judge by what happens in public.

For example, if the Helvetia ad continues to appear, it suggests that they have done nothing, apart from investigating it. The BCP Quadruple Growth Bond is still advertised as such, despite the Consumer Protection Code. I can't understand it, but the Regulator can't tell me why.

Brendan
 
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