Structured Deposits Guide

Market potential with capital protection

Potential Returns   |  Capital Protection  |  Counterparty Risk  |  FSCS  |  Risk and Return  |  Portfolios  |  Income and growth 

The structure


Structured deposits are a type of fixed term investment plan which offer capital security similar to a savings account but with returns linked to a market, such as the FTSE 100 Index.

Potential returns

While returns are not normally guaranteed in structured deposit plans they offer the potential for competitive rates of returns over fixed terms. When interest rates are low they can offer investors a relatively low risk exposure to market performance.

The plans also offer protection from market volatility but as returns are set to a defined level you do not have complete exposure to the performance of the underlying index or asset.

Golden eggs

Capital protection

In a deposit plan money is held with a deposit taker, such as a high street bank, which provides capital security comparable with a savings account. Other plans which offer capital protection, but are not deposit structures, will be backed by a bond and will not necessarily provide level of capital security that a deposit does.


Counterparty risk

Capital is at risk if the counterparty to the plan, the deposit taker, is unable to meet its liabilities and repay investors.


Financial Services Compensation Scheme

In the event that the deposit taker becomes insolvent and cannot meet its liabilities, as long as the deposit taker is an FSA authorised institution, such as a UK bank, you may be eligible for compensation from the Financial Services Compensation Scheme (FSCS).

The FSCS deposit protection scheme covers an individual up to £75,000 per authorised institution. See the Savings Protection Guide for more information.


See the table below for examples of structured deposit plans:

Income Structured Deposits
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Important Information: Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

Risk and return

One of the primary benefits of structured deposit plans is that they can offer market-linked returns without the volatility and risk of full exposure to that market. The most common underlying market for plans is the UK stock market, specifically the FTSE 100 Index.

For example, a 6 year plan could offer a minimum return of 15 per cent at the end of the term as long as the average level of the FTSE 100 is higher than the level at the start of the plan.


Portfolios

In an investment portfolio structured deposits can help limit exposure to falling markets, because capital is protected from market volatility. However, as the returns are generally dependent on an underlying index, in a falling market the investment will not yield a return. 


Income and growth

Plans that aim to return a regular income payment are available, as well as plans that offer one off potential growth over the fixed term.


The structure

The two components of structured products are known as a note and a derivative. In a structured deposit the note would be the deposit account for the capital, while the derivative element is a financial instrument used to generate the potential return.



Growth Structured Deposits
ProviderPlan NameDeposit TakerISA OptionTermMaximum Potential ReturnMore Info
Retirement Deposit PlanInvestec Bank plcyes6 years

3.75%

per year, plus 22.5% at end of term

More Info >
  • 3.75% annual payments from capital
  • 77.5% remainder of initial deposit paid at end of term
  • Potential 22.5% growth return at end of term, if the Index is higher than 90% of Initial Value
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA and  ISA Transfers 
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Only available for new ISA investments or ISA transfers, not direct investments
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
4 Year Deposit PlanInvestec Bank plcyes4 years

12%

at end of term

More Info >
  • 12% fixed return if the Index is higher
  • Capital protected
  • Low minimum - £3,000
  • Short/medium alternative to fixed rates
  • Available for Cash ISA, ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
6 Year Defensive Deposit PlanInvestec Bank plcyes6 years

24%

at end of term

More Info >
  • 24% fixed return if the Index is higher than 95% of its Initial Level
  • Capital protected
  • Low minimum - £3,000
  • Medium/longer term alternative to fixed rates
  • Available for Cash ISA,  ISA Transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital
Kick Out Deposit PlanInvestec Bank plcyesUp to
6 years

3%

per annum

More Info >
  • 3% for each year if the FTSE 100 finishes higher than its starting value
  • Opportunity to mature early at year 3, 4 or 5
  • Capital protected
  • Short/medium term alternative to fixed rates
  • Available for Cash ISAs, ISA transfers and non-ISA
  • Covered by the FSCS (Financial Services Compensation Scheme)
  • Limited offer - deadlines apply. May close early if oversubscribed
  • Plan designed to be held for full term
  • Arrangement fee applies
  • Returns not guaranteed. You may only receive a return of your original capital 
Important Information: Structured deposits offer you the potential to earn higher returns than you would with a regular savings account. Your returns are based on the performance of an index or commodity. If the investment does not perform well you may receive no income or capital growth, but you can be confident that your capital will be repaid. You have no access to your deposit during the term of the account, typically 3 to 6 years but your original capital will be repaid in full at the end of the term. In the event that the deposit taker is unable to repay your initial investment and any returns stated you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS) depending on your individual circumstances.

 Important Risk Information:

This website contains information only and does not constitute advice or a personal recommendation in any way whatsoever. The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. The tax efficiency of ISAs is based on current tax law and there is no guarantee that tax rules will stay the same in the future.

Different types of investment carry different levels of risk and may not be suitable for all investors. Please ensure that you read the Important Risk Information for further details. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment and should read the product literature. If you are in any doubt as to the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.