Dot ComUnity Credit Union - ISA

Steve_xx

MARTYM8` wrote: »

I agree that you are fully protected - but that presumably only kicks in if they go under. Potentially they can carry on in a state of limbo indefinitely not taking deposits/paying withdrawals - while sitting on their members money. Surely there must be a deadline by which the regulator says enough is enough.

I do find it odd however that history has repeated itself it seems in just 3 years. When they launched a headline ISA paying well above the market rate you might assume that could spark warning bells with the regulator?

Well these things have a habit of bringing themselves to a head. Clearly they cannot sit on your cash indefinitely. The regulatory regime will have imposed a set of conditions on them, along with a timescale by which they must be met. If they are met, then sanctions may be removed or they may be adjusted to some degree. If they are not met, then things will start to unravel. If the organisation cannot function, then I would think that somebody would be appointed to administer it.

At this juncture there is much speculation as to the current state of their affairs. The speculation is enhanced due to them not saying much. One has to wonder if they have been ordered to not comment or if they have simply decided not to comment.

MARTYM8`

darren72 wrote: »

Exactly. The problem I have is that I didn't deposit my full allowance into the ISA - I was planning on adding to it before the end of the tax year. If this continues I will lose part of this years ISA allowance

You can however pay the balance of your ISA allowance into a stocks and share ISA - ideally one with a cash holding facility so its not put at risk if you want to guarantee your funds.

Fidelity for example has a cash park facility - it earns negligible interest but counts as a stocks and shares investment and you can transfer this into a cash isa under the new rules from 1 April. Given its only 1 month that's probably not such a big issue.

https://www.fidelity.co.uk/investor/isa/isa-cash-park.page

masonic

Steve_xx wrote: »

Clause 2(iii) means that DotCom could not allow you to withdraw your money even if they were prepared to allow you to. At least, that's how it reads to me??

This seems really hard to believe. The situation could drag on for some time and the FSCS will not pay any claims for compensation without a declaration that the credit union is in fact in default. Looks like they will have 28 days to refer the case to a tribunal, and might even have the right of appeal after that. Presumably accounts will remain frozen until after that process has been exhausted. Perverse as it sounds, the best outcome for depositors might actually be for the union to be declared insolvent as soon as possible so that the FSCS can kick into action.

darren72

MARTYM8` wrote: »

You can however pay the balance of your ISA allowance into a stocks and share ISA - ideally one with a cash holding facility so its not put at risk if you want to guarantee your funds.

Fidelity for example has a cash park facility - it earns negligible interest but counts as a stocks and shares investment and you can transfer this into a cash isa under the new rules from 1 April. Given its only 1 month that's probably not such a big issue.

https://www.fidelity.co.uk/investor/isa/isa-cash-park.page

Thanks for that - I never even thought about it

Steve_xx

masonic wrote: »

This seems really hard to believe. The situation could drag on for some time and the FSCS will not pay any claims for compensation without a declaration that the credit union is in fact in default. Looks like they will have 28 days to refer the case to a tribunal, and might even have the right of appeal after that. Presumably accounts will remain frozen until after that process has been exhausted. Perverse as it sounds, the best outcome for depositors might actually be for the union to be declared insolvent as soon as possible so that the FSCS can kick into action.

Yes. On the downside, this is new ground. If this company were to fail and the FSCS paid compensation, then what would happen as regards the ISA status? There would probably have to be some special provision to ensure that monies could possibly remain tax-wrapped.

Steve3S13

I read previously that we are provided with written proof of the ISA status of the funds

masonic

Steve_xx wrote: »

Yes. On the downside, this is new ground. If this company were to fail and the FSCS paid compensation, then what would happen as regards the ISA status? There would probably have to be some special provision to ensure that monies could possibly remain tax-wrapped.

There is some precedent on the ISA question. The compensation will come along with a voucher that can be presented within a certain timeframe to a new ISA manager in order to get them to accept the subscriptions as if they were coming from a transfer.

Steve_xx

masonic wrote: »

There is some precedent on the ISA question. The compensation will come along with a voucher that can be presented within a certain timeframe to a new ISA manager in order to get them to accept the subscriptions as if they were coming from a transfer.

I see. In that case that's one worry that can be set aside. On the face of it, there's little to be troubled about then. I remember well that the Icesave/Kaupthing debacle seemed to be sorted pretty fast, and I for one certainly don't remember having to do anything in respect of those two.

someone

Are they not insolvent once they can no longer meet their obligations repay a depositor? Could not just one person win a winding up petition to force the credit union to fold triggering the requirement for fscs payment?

Are the rules different for banks? Can a regulator hold a winding up petition? Are depositors creditors?

masonic

someone wrote: »

Are they not insolvent once they can no longer meet their obligations repay a depositor? Could not just one person win a winding up petition to force the credit union to fold triggering the requirement for fscs payment?

Are the rules different for banks? Can a regulator hold a winding up petition? Are depositors creditors?

If there's a regulatory reason why they can't repay depositors, then I don't think that would make them insolvent. At the moment, the union and it's depositors are locked in a process instigated by the PRA, so until that process reaches a conclusion it seems unlikely anything will happen.