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HPB - gold bondholders - changes to fund

Manchester, United...
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HPB - gold bondholders - changes to fund

I should be obliged if other HPB gold bond holders would let me know what they think to the changes. Is it time to hang on and await a long dwindling demise of the fund ; or take the pain and pay up to continue to enjoy the stress free holiday arrangments.

Do you feel like me - let down.

Long standing bond holder

Leicester, United...
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1 post
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1. Re: HPB - gold bondholders - changes to fund

Hello,

We are also not sure what to do, glad to have someone to talk to.

The way we understand it and the options;

1. Do nothing - no cost. As you say, watch our investment decline to possible zero balance on our demise. However, we did not look at the Bond as a financial investment but the opportunity to take great value holidays. We could transfer the Bond to our sons & daughters. The Bond may not have a financial value but it still has a points value which still gives the opportunity to book holidays. The Bond goes on forever.

1(i) Nothing is forever, do our s&ds have to pay up the minus value of the bond after taking out the management charges on the final closure of the bond.

Will follow up other options on replys. Philip

Poole, United...
8 posts
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2. Re: HPB - gold bondholders - changes to fund

We also feel let down.

We do not feel like paying extra to make up for their poor investment strategy.

We also invested for the holidays not the investment and provided our points are protected we do not see the need to change to Diamond. However, we have been unable to talk to HPB so far, so we need this confirming, but they do seem to change the rules without consulting.

Our children do not seem that interested in the bond so we are not bothered if the value declines. However we are waiting to talk to HPB to get clarification before deciding what to do. Stuart

Glasgow, United...
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71 posts
159 reviews
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3. Re: HPB - gold bondholders - changes to fund

I share your sentiments

We have spoken to David Montgomery of HPB who stepped us through the investment with 25% going in commission to straight to HPB International in Gibraltar for marketing and then 60% of the residue going for property and 40% into the Gold bond unit Trust to deliver 3.1% return on investment to pay maintenance charges. As the unit trust investment failed they had to sell some units and then did this for 3 years. It seems our Gold bond is now unable to deliver the 3.1% as the units are too depleted. The property investment element is not affected. The 5 year threat was meant to imply if they took no action(not us)

I am going to write on concerns not covered or answered such as

Why was the communication on this delayed for 4 years and require us to pay 36% extra. Earlier notice should have been given.

Why did they make a gift of 9% of units to large bond holders but only charge them the same as smaller holders £100 per year. If you had 50000 units you got 4500 free ( at 60p a point in the old days) a benefit of several thousands for £100 . If you had 5000 points you got 450 for the same fee commitment. This seems grossly unfair.

As a supposed property investment why has the price fallen whilst property is now twice the price. I was told Tigh Mor cost £400K to but, £9M to do up and has been valued at £4.5M a loss of £5M

The Bond operates through a web of companies and has generated several more though our support, but there has been no benefit to us from Travel Club and Stately country homes companies. Its Gibraltar and Isle of Man bases allow it to operate through smoke and mirrors.

We will either sell and get 63p or hang on and let the price fall. I dont think we will convert.

Poole, United...
8 posts
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4. Re: HPB - gold bondholders - changes to fund

I share your concern that they have waited so long to tell us about the poor state of our investment. We still have not been able to talk to HPB so have been unable to ask our questions. My main concern is whether we lose our holiday points at sometime in the future, say if the fund is wiped out. Have you been able to determine the facts on this? Stuart

Glasgow, United...
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71 posts
159 reviews
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5. Re: HPB - gold bondholders - changes to fund

Hi Stuart

If you phone the Diamond bond number they should take your number and call back. Thats what we did and and it took them till 5.15pm the following day. Mr Montgomery was planning to be there till 8.30pm Friday when we called at 5.30.

No we were told the points are unaffected and will continue to rise with inflationand you can keep taking holidays . The bond deficit will be kept on tab until you sell the bond. I do wonder on that, for if trends continue there must arise a position where we owe more than we have in the bond.

On that front I just got the forms to sell and find you cant do that until 6 months after your last holiday. There is also a clause that says HBP can delay sales for up to 12 months in the event they would have to sell property to do it and you get the valuation in 12 months time whatever that may be.

I also so the Diamond bond is not performing much better than the Gold one and is still falling. I wonder what the next option will be. Platinum and pay £200?

Newmarket, United...
9 posts
1 review
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6. Re: HPB - gold bondholders - changes to fund

Hello from HPB Management Limited. We are sorry that some Gold Bondholders feel let down, but hope that we can allay some fears with a general response to the issues raised on the recently announced Gold Bond changes. These changes do not affect anyone who invested from the 1st January 2004 onwards or earlier Bondholders who have previously elected to switch to Diamond.

The most important point is that if, as a Gold Bondholder, you choose to do nothing your holiday benefits are completely protected. Your annual points entitlement will continue to be adjusted in line with any changes to the holiday points required for existing properties. You will still be able to pass your Gold Bond to the next generation with the same holiday benefits and without any additional charges then becoming payable.

The main parties behind HPB, HPB Assurance and the HPB Management companies, are agreeing to defer their Gold Fund fees until a Gold Bond is encashed because the securities element of the Gold Bond is no longer sufficient to pay them as they fall due. The deferred fees will attract no interest so the future unit price of the Gold Bond will largely depend on whether or not its property fund increases sufficiently in value to cover and exceed the deferred fees. Even if the Gold Fund property element performs disastrously, there is no situation in which a Gold Bondholder or his/her successors would have to pay any shortfall.

We wanted to give Gold Bondholders the option to convert to Diamond or start a parallel Diamond Bond so that, in particular, they could increase their holiday entitlement if they wanted to. Nobody has to and if they choose to remain as they are their position is unaffected. The changes in terms of deferred fees simply ensure that holiday benefits are fully protected without Gold Bondholders having to do anything.

We would like to have mailed people about this earlier, but once the proposals had been formulated they had to be discussed and agreed with auditors and actuaries before being seen by the Life Company’s regulator. The mailing also took a little longer to be delivered than anticipated and as we are now moving into the holiday season, we have extended the closing date to 31st July for those who wish to take advantage of the conversion or top up offers.

Poole, United...
8 posts
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7. Re: HPB - gold bondholders - changes to fund

Hello bdenhow,

Thanks for your reply, We have phoned the helpline but at the moment there is a bit of a backlog and they have suggested they will reply within 5 days. I am puzzled why we need to pay 36% to convert when the Diamond Bond does not appear to be performing much better than Gold. We didn't convert in the past because we did not want more points and could see no real advantage to us, plus the disadvantage of paying a quarterly fee. We are not inclined to pay 36% (a significant fee) when we still don't need any more points. Also we are not sure what the 36% is of - is it our original investment or the equivalent of our current points total or some other value.

Stuart

Glasgow, United...
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71 posts
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8. Re: HPB - gold bondholders - changes to fund

James

Its good to see this explanation and reassurance. One of the problems is our investment has been poorly explained and poorly reported upon and maybe you can rectify that.

However, why has this been allowed to drift for 4 years with no indication that a massive shortfall was building up of anywhere near this size - 36% is ridiculous? Why no letter from the Bondholders Committee - the only one I remember was on the Travel Club sell off. I feel they owe us an apology.

Why were those with larger investments given favourabe benefits - ie promise to pay £100 pa and get 9% of points free - so for someone with 50000 units got 4500 points free inflatable annually so now neare 5000, when smaller investers with £2500 still had to pay £100 for 225 points. Surely maintenance comes from use of property and larger holders used them much more. These points used to be sold at 60p a point so whose money was used to make such excessive offers so you got the big money in the Diamond bond quickly. It seems Gold bonders have subsidised the switchers and those left are having to pay up for that extravagance.

Stuart

We were like you, not much incentive and a promise on no annual fees broken amde us stay where we were.

My understanding is the 36% shortfall is based on the value of your units (not Points) so if you have 5000 units worth 63p (value £3150) you pay 36% of £3150 or £1134 for no added points, but for a "better property investment". Im assuming there is no 25% commission removed. James may correct me if Im wrong

Harrogate
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10 posts
6 reviews
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9. Re: HPB - gold bondholders - changes to fund

Its at least a comfort to know that my reaction to receiving this communication was not an unreasonable one. Like others here I am pretty appalled that the situation has been allowed to drift to the point where the very people who ensured the HPB got off the ground are now being given some very uncomfortable options.

My current inclination is not to throw good money after bad, and effectively write off what I curently have in HPB for as long as it lasts. I always had concerns that the collective effect of charges overburdened the fund, but I suppose Equitable Life should tell us that you can't necessarily trust actuaries. I think my concerns were justified, and I have to say that is why I have not topped up my bond in recent years. I didn't want to get too exposed to it.

The options given to us are pretty stark.

1) There is clearly no logic to adding 36% cash for no benefit, just to let this scenario repeat itself. Without a change in the charging structure this is a dead duck.

2) Starting a Diamond Bond with £1000 is an option I've considered....but you then pay the same as all Diamond bond holders and your Gold Bond is no better placed, so you are still watching the value deplete on that. I'm not sure of the point of doing that either.

3) Leave it as it is and let it do what it will, bearing in mind the managers may eventually do as inferred in para 3 of the flyer and wind up the gold fund and send whats left (if anything) back to you.

Either way its a mess and as a bondholder from the very early days I feel mightily let down, but not as surprised as some, as I always felt the charges would kill the fatted calf one day.

Tim

Glasgow, United...
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71 posts
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10. Re: HPB - gold bondholders - changes to fund

Hi Tim

I agree with your assessment. On3 James seems to reassure that the points we have remain valid for as long as wee keep the units and if the gold bond fails then we will still have some unit value from the property element. I would like all the reassurances spelled out in a letter though.

I gather 1100 silver bond holders have been made a similar offer .

I feel smaller Gold Bond investors have been treated unfairly and would love to complain, but Isle of Man and Gibraltar set ups seem to make that difficult.

I would also like to know what happened to the Bond funds as a consequence of the Travel Clubset up by and for bond holders using their resources from HBP premises - likewise Stately Country Holidays. The benefits seem to have gone to directors and not to Bondholders. Then there is HPB Assurance and how it is structured through the Isle of Man.

We need some straight talking, Anyone going to the AGM - its too far for me.