Investec Structured Products is launching for the second time this year a reduced collection of plans in the UK as challenging market conditions hit the pricing of a number of payoff types.
"What we did when we launched out last collection was to withdraw our income deposit plan, not withdraw from the deposit market as suggested by a couple of publications," Gary Dale, head of intermediary sales at Investec told SRP. "The issue that most providers have at the moment is that the pricing backdrop is tight and the economic backdrop pretty uncertain, so when we are pricing these products if we can't offer what we believe is good value then we suspend them and we remove them from the collection, but not permanently."
The new Investec collection omits the five-year deposit plan with Lloyds as the deposit taker and the gilt-backed growth investment plans, and will comprise three deposit plans (FTSE 100 Kick-Out Deposit Plan 24, FTSE 100 3 Year Deposit Plan 29 and Deposit Growth Plan 12) and four investment plans (FTSE 100 Enhanced Kick-Out Plan 24, FTSE 100 Geared Returns Plan 29, FTSE 100 Accelerated Growth Plan 29 and FTSE 100 Bonus Income Plan 19).
Dale said the new collection features increased rates on some of the products as a result of the adjustments to the range: "To offer the full collection cost money in terms of pricing and we don't believe in having plans open with inferior payoffs. So we can either cross-subsidise to keep these plans open, or we put the value back into the plans we believe the market wants," he said. "The increase in the rates we are offering in the new collection is possible quite simply because we have rationalised the whole collection, so any cost we save by rationalising the plans is put back into the plans we are going to sell."
The products offering increased rates are the FTSE 100 3 Year Deposit Plan 29 (17.5% - Option 1 /14.5% - Option 2); the FTSE 100 Kick-Out Deposit Plan 24 (5.5% - Option 1 / 5.75% - Option 2; the FTSE 100 Enhanced Kick-Out Plan 24 (12.5% - Investec option / 10% - UK 5 option); and the FTSE 100 Geared Returns Plan 29 (75% - Investec option /62.5% - UK 5 option).
Dale said market conditions never suit every type of payoff profile and that Investec reviews its position every six weeks and value tests its products to keep them competitive: "We have a mandate to offer these products on a continuous basis and our aim is to offer a strong value on each and every one of those payoff profiles," he said. "We adjust our offering to existing market conditions and that's what all providers should be doing."