The Cater Allen Annual Locked In Return Plan 5 will return 6.50 per cent each year the FTSE 100 Index is at or above its initial level over a fixed six-year term. The return of investors’ initial investment is also assured as long as they hold the product until it matures.

In all, investors could see returns amounting to 39 per cent of the original investment, equivalent to 5.26 per cent AER (variable). 

The lock-in feature means that any cumulative returns will be paid out at maturity, which avoids any potential gains from being wiped out by a drop at the end, the bank said in a statement. The product has been designed with ISA investors in mind as it allows them to take advantage of a double Cash ISA opportunity by utilising their 2011/12 tax year allowance of £5,340 in addition to their 2012/13 tax year allowance of £5,640. The first amount is the minimum investment threshold before 6 April and the second applies after this date.

Last month Cater Allen launched the Growth Plan 12 – a product designed to offer market-linked, uncapped returns equivalent to 100 per cent of any rise in the FTSE 100 Index at the maturity of its six-year term, with monthly averaging throughout the final year to ease against volatility.