Fourth issue for guaranteed bond

BRISTOL & WEST Building Society launched a fourth issue of its Guaranteed Equity Bond this week, offering 110 per cent of the gain on the FT-SE index over five years.

The launch of the bond coincided with new rules imposed on building societies by their regulator, the Building Societies Commission.

These require societies to give investors in these types of product a seven-day cooling-off period.

Building societies have taken millions of pounds into guaranteed equity bonds, which offer returns linked to increases in the stock market.

B&W's bond allows investors to withdraw until 19 May, a provision built into the product before the commission's new rules were issued.

It does not comply strictly with the commission's rule, however. Investors putting money into the B&W bond a day or two before 19 May would not get the full seven-day period of grace.

However, it is understood the commission does not expect societies to alter the terms of products already launched when the new rules were issued. B&W said it would look at the terms of its product and consult the commission.

National & Provincial has a bond open at present which closes to new investment at the end of May. This bond already offers a seven-day cooling off period.