Dot ComUnity Credit Union - ISA

Archi_Bald

pafpcg wrote: »

I agree, except it's not a bank with customers (and shareholders) but a credit union with members!

Being a credit union doesn't give them any right to mis-handle members' money, or to treat their members the way they treated us ISA holders over the last couple of months.

MARTYM8`

darren72 wrote: »

Especially when they got themselves into the same situation only a few years ago - They obviously haven't learnt from their mistakes.

Totally agree - to err once is forgiveable but to s***w up twice in a couple of years is unforgiveable and unacceptable.

How the regulators allowed them to get into this position however also needs asking - you might assume recent transgressors might be on a short leash for a while. And then when you see them offering a market leading ISA (by some margin) available nationally surely alarm bells should ring?

I just have no confidence in them at all or their ability to manage their affairs or their members deposits properly. Sorry if that sounds harsh!

masonic

pafpcg wrote: »

I agree, except it's not a bank with customers (and shareholders) but a credit union with members!

That is true, but you could say the same about building societies. We don't see banks or building societies (nor the vast majority of credit unions I'd wager) going around trying to coerce depositors to invest in risky deferred shares under the guise of a savings account.

MARTYM8`

masonic wrote: »

That is true, but you could say the same about building societies. We don't see banks or building societies (nor the vast majority of credit unions I'd wager) going around trying to coerce depositors to invest in risky deferred shares under the guise of a savings account.

And on the one hand they are telling members they cannot withdraw their savings which are FSCS protected as they have issues with the regulators - while on the other hand encouraging them to make new investments which offer no such protection.

Maybe it will all work out fine - but why would you risk it based on their current predicament and past mistakes.

masonic

pafpcg wrote: »

Assuming that the problem that DotComUnity faces is as straightforward as they imply in their letter to members last week, then the solution for those keen to be able to withdraw funds from April onwards is simple - generate enough funds in the reserves to meet the regulator's requirements and DotComUnity can go back to normal business. Perhaps if DotComUnity could come up with something innovative or at least something which doesn't require such a large commitment from individuals as the bond offered in last week's brochure, it should be easy enough to clear what seems to me from the figures given in the letter to be a relatively low hurdle.

Let's not forget that even if they do raise enough money to build up their capital reserves to 5% and the restrictions are lifted, there are likely to be a lot of people who have been spooked by the goings on that will take out their money in April, which will drain those reserves right back down again.

For those who have only invested in FSCS protected products, it will be somewhat inconvenient if DotComUnity is wound up and they have to get a cheque or bank transfer from the FSCS, but for those who have also put their money into the deferred shares, they stand to lose money.

Porcupine

pafpcg wrote: »

The thought occurs to me that if their sales pitch last year had been "We can offer 3% on a one-year ISA, provided that you deposit an equivalent of 5% of your ISA deposit in our reserves (on which we'll pay you 4% interest but it's unsecured)". In other words, for every £10,000 we put into their ISA, we had to put £500 into their deferred account (not just a flat-rate £5). I think there'd still have been a substantial take-up and there would not have been a breach of the regulator's rules.

Interesting idea. While that scales with the amount of funds under deposit, I'm a bit unsure about it. Don't forget that deposits are liabilities in the eyes of bank/credit union. So you have depositors 'invest' in you so you can pay back their debts (deposits). I'm not sure if that would be allowed. If it did, it would be a useful brake on potential oversubscription.

On the subject of FOS, I believe that every complaint to the FOS costs the institution £500 or so. However, first you have to go through the internal dispute procedure, and nobody here has done that. Secondly, if DCU is strapped for cash then the last thing they want is some punitive FOS fines when they don't have the money to pay them, it'll only make things worse. It's a bit like payday lenders but this time it's the bank borrowing off the payday lender...

A 'class action' FOS complaint might be useful though - it's still a complaint and potentially causes action, but limits the destabilising effect of the FOS fines.

colsten

Porcupine wrote: »

On the subject of FOS, I believe that every complaint to the FOS costs the institution £500 or so.

it only costs http://www.financial-ombudsman.org.uk/faq/businesses/answers/funding_a5.html if an adjudicator needs to look into the complaint.

Porcupine wrote: »

A 'class action' FOS complaint might be useful though - it's still a complaint and potentially causes action, but limits the destabilising effect of the FOS fines.

No offence but I prefer to do my own complaints.

masonic

Porcupine wrote: »

A 'class action' FOS complaint might be useful though - it's still a complaint and potentially causes action, but limits the destabilising effect of the FOS fines.

On the 12-18 month timescales the FOS work to, I don't think that would be of much use. The FCA/PRA will determine whether or not the union is a going concern long before that.

Archi_Bald

Meanwhile, they are are begging to be voted "Business with a Heart".

They would get my vote for the "Business with a Heart Failure" award.

Bhamstudent

Just as a quick update as promised - I spoke to Neil (their compliance manager) yesterday. He said that there was another meeting with the PRA this Friday and that their legal team were very hopeful that it would be business as usual following this meeting. He has promised to give me a call back following the meeting, so I'll update again on here once I've heard from him. He seemed happy to speak and said he had spoken to other members - so it may be worth giving them a call if you want to hear/ask things directly.