8.05% Rolling Account One Year Notice from Friends Mutual

jimjames

don_giovanni wrote: »

They say they invest in property development. That can produce returns well above 25% pa. So keep the overheads under control and offer a little extra interest . . . they're probably making a fortune.

If you want to invest in property development then go and buy a property fund.

If you want a cash deposit with guaranteed return then use a UK bank under the FSCS, horses for courses.

don_giovanni wrote: »

There is nothing more entertaining than a mutual admiration club of “longstanding and respected forum members”, some of whom doubtless work for the high street banks that own this “independent” comparison site.

I don't work for a bank but more than happy to warn of scams whether it is pseudo banks or fake modelling agencies - if we can help 1 person not get ripped off then it is worth it.

Go ahead Don, throw ya money down the drain!

richyg

From the faq.

I live in New Zealand – can I open an account and make a deposit?
For the time being, Friends Mutual can only take deposits from clients living outside New Zealand. However, watch this space!

:( :rotfl:

Why cant the lovely New Zealand people get a share of the this fantastic offer. It just so unfair.

Aegis

Since you want to keep playing this farcical role you've adopted...

don_giovanni wrote: »

Firstly, rather than a fraction, banks lend out practically all the deposits they receive. Secondly, how do you think “other deposit takers” function? By taking money in and sitting on it? No: they lend it out too. In that sense, their functions are identical.

First point: fractional reserve lending doesn't mean that only a fraction of money is lent out by the bank. It means that the bank can make multiple loans of the same deposit and thereby create additional liquidity in the general system. This allows banks to make more loans at a lower rate of interest (i.e. for lower-risk ventures), but still achieving enough of a return to pay their staff, retain profits and still pay out some interest.

Without the option to fractionally reserve, organisations must make much higher risk loans and cannot back multiple loans with the same capital they hold in reserve. In other words, if this outfit wants to pay a rate of 8% after their own take, they must be lending out at an even higher rate of interest, which starts to look like junk debt. If it's junk debt, then the risk of total loss of the investment capital is high, which in turn means that an insurance policy from Lloyds would cost a small fortune, which in turn means that the required rate of interest is even higher.

Fractional reserve lending works because the organisations which use it are heavily regulated and cannot simply make loans wherever they see fit. The risk of enough default occurring to put deposit money at risk is minimal, especially with the Bank of England standing by as a lender of last resort to give banks additional liquidity if they are unable to manage for themselves.

A very good example of what happens when this goes wrong is Northern Rock. Their liquidity dried up, and if they were a standalone company with no statutory support they would have defaulted on their debts and gone into administration, with depositors potentially losing enormous amounts of money. Instead, because they are a regulated bank, the situation was dealt with without a single depositor losing a penny.

Now, what would happen with an unregulated scheme going bust...?


Your second point would be valid only in terms that might be agreed by an inexperienced investor. By this logic someone borrowing money from a payday loan company and paying interest on it (i.e. taking in money and giving a return on it) and using that money to invest in pork futures is, in essence, performing the exact same function as a bank. Totally absurd example, but this is what happens when you apply the same faulty logical reasoning that you have used above.

What’s the difference between paying a premium towards the FSCS or Lloyds insurance? One difference: the FSCS is limited to £85k but the Lloyds scheme is apparently for £500k. I know which I’d rather have.

The FSCS exists and is funded by the entire UK financial services industry if anything goes wrong.

On the other hand, there's no evidence that the Lloyds of London policy even exists. In addition, even if such a policy were real, insurance almost invariably comes with a whole range of restrictions on what will be paid out and under what circumstances. Furthermore, syndicates at Lloyds are wholly reliable on the Members who financially back the agreements in question. If I were looking to put money with this organisation, I'd want to know who was supplying the financial backing at Llyods in the event that this scheme went bust, as those individuals would be the ones footing the bill in the event of default. If they went bankrupt as a result of the claim, no protection.

I'll stick with the statutory protection backed by the entire UK financial services company, thanks.

This part of your post makes me think you don’t understand the meaning of cash. Folding bits of paper have no intrinsic value, whilst a deposit with a financial institution - whatever you call it - is not cash, just a debt.

Really. I work as a regulated financial adviser and I don't know what cash is?

Little hint: I never mentioned anything about folding bits of paper or intrinsic value, so implying that I thought either of these things was simply wrong of you.

My own definition of cash that I use with clients is any investment where the nominal value is not at risk under normal operation (i.e. there would have to be widespread systemic shock for the amount returned to be lower than the starting amount) and where returns are only paid in the form of interest, not dividends or capital gains.

Bank and building society accounts will only pay out less than the starting value if the bank goes bust and either the amount in question was over £85k and the FSCS elects to break its usual stance and enforce the savings limit for compensation or, worse yet, the FSA itself actually goes bust.

There are vastly more circumstances where an essentially unregulated scheme would fail to pay out, so it's not cash.

I'd rather not lose money, which is precisely what happens by sitting on the couch, never investing but always criticising. The high street banks form a cosy club to rip off borrowers by charging them up to 30% - whilst only paying savers a lousy 1%pa. Maybe you can live on that but I can't.

Another swing and a miss there. About 10% of my wealth is in cash, representing my emergency fund and my current account. Everything else is invested in regulated schemes where I understand the risk/return profile and know exactly what protections I have when things go wrong.

Stop screaming: this lot are only offering a few per cent over the high street. I’d become worried if the difference were ten per cent or more.

This scheme is offering rates almost 3 times the high street level. 2.5% is about right for a 1-year bond at the moment, not 8% or more.

vectistim

That was a bit of fun - I just went through their account application procedure using the name Henry Kissinger, on the last page of it they wanted you to upload a scan of your passport and utility bill (having already asked for name, dob, address etc) still with no encryption of any form, I didn't attach anything and it still let me complete my application, and apparently I will hear something in the next two days (or at least I allegedly would do had I provided a real email address), and I was given the application reference number 100008, so presumably the eighth 'application'

Its intriguing as City Endowments Limited, which is listed as a sister company seems to be a real company with real profits:
https://www.duedil.com/company/03597588/city-endowments-limited
so I'm not quite sure what is going on with this very dodgy 'Friends-mutual' site which has only been in existence since September:
http://reports.internic.net/cgi/whois?whois_nic=friends-mutual.com&type=domain

Aegis

ctdctd wrote: »

It's Re-Give all over again but even worse - based offshore.

The FSA stepped in and got the fools money back - they won't assist if it's offshore.

It's a long way to New Zealand to try and get your money back when it goes tits up - and it will.

That's the one I was struggling to remember the name of, thanks.

VfM4meplse

mjtaylor76 wrote: »

I'm seriously considering this for £60,000 , best I can find is 2.35% Any suggestions? Is it risky? Is it legit?

Any other good ideas?

Cheers!

Nice fantasy, stick to BM until something better comes along (unlikely).

talexuser

Last time I saw Don Giovanni (by Mozart) he was burnt in hell at the end :rotfl:

Sceptic001

don_giovanni wrote: »

What’s the difference between paying a premium towards the FSCS or Lloyds insurance? One difference: the FSCS is limited to £85k but the Lloyds scheme is apparently for £500k. I know which I’d rather have.

The FSCS scheme pays out up to £85k per account holder per licence if the institution goes bust.

What is the Lloyds insurance guarantee? Does it perhaps pay out up to £500k if the money is de-materialised by extra-terrestrials wearing pink shell suits? The premium for that eventuality is probably not too steep.

Perhaps don_giovanni can tell us more about this insurance policy from Lloyds.

bowlhead99

don_giovanni wrote: »

Aegis wrote: »

I'd rather not lose money, which is precisely what will happen to you if you give the benefit of the doubt to every scheme which offers you a rate that should scream that it's too good to be true.

Stop screaming: this lot are only offering a few per cent over the high street. I’d become worried if the difference were ten per cent or more.

£10k in a regular one year deposit might return £250. This will allegedly return more than £800. The advertised return is over two hundred percent more than the going rate.

jimjames

Sceptic001 wrote: »

Perhaps don_giovanni can tell us more about this insurance policy from Lloyds.

Don has gone mysteriously quiet. Maybe he has realised he has been busted.