Dot ComUnity Credit Union - ISA

Archi_Bald

I hold £5 in my Basic Share Account, and that is as much as I am willing to sink into this company. Be very wary, it seems you have basically no rights to the money in the Basic Share Account.


According to their website, a Basic Share Account is a "Deferred Share". Apart from not being subject to the FSCS, it also seems you can basically never withdraw a Deferred Share. As always, the information they publish is totally confusing, so what they say may not be what they do.

The Basic Share Account represents a Deferred Share within the Credit Union. Deferred Shares are not protected by the Financial Services Compensation Scheme (FSCS).

http://www.dotcu.org.uk/creditunion/savings/member-basic-share-account.html

When can deferred shares be repaid?

Deferred shares can only be repaid in two cases. In case A all other creditors must have been paid first, including holders of subordinated debt. In case B the regulators must consent to the repayment.

Case A Creditors have been paid

This applies where the Credit Union is being wound up or dissolved and all the creditors have been paid in full. ‘Creditors’ include members who hold other types of share in the Credit Union. All their shareholdings must have been repaid in full, and they must have received any interest or dividend, before the deferred shareholders can be repaid. ‘Creditors’ also include holders of subordinated debt so they too need to be repaid, albeit after unsecured creditors and the holders of other types of share. (If the amount remaining after doing this is insufficient to repay the deferred shareholders in full, they will be repaid proportionately to their shareholding.)

Case B With FCA’s consent

The Credit Union needs to have applied to the regulators for the necessary consent and to have had it granted.

The application must not be the result of a provision in any of the issue documents:

requiring the Credit Union to apply;
granting the Credit Union any benefit for applying; or
imposing a sanction for not applying.

http://dotcu.org.uk/creditunion/about-us/about-our-shares.html

Forti

Has anyone heard anything further? I'm not feeling confident they have got any agreement today.

darren72

Forti wrote: »

Has anyone heard anything further? I'm not feeling confident they have got any agreement today.

No, not heard anything here - Doesn't sound promising.

Joe_Bloggs

Masonic Said:-

It's the same sort of process as with a Ponzi scheme.

If you look at the FAQ for the basic share account, it states: "If you decide that you would like to leave the Credit Union and no longer remain a member, you will need to withdraw all monies held within any Credit Union account."

So those members leaving are going to need to be repaid their monies, and how else will that be funded except through new capital paid in by other members. Otherwise those 5% capital reserves are going to get depleted pretty fast and they'll be back at square one.

I suspected it was an accidental Ponzi scheme. The investment offer was very very good hence the overwhelming take up. So how do you unwind an accidental Ponzi scheme without losing the trust of those involved in the system ?

J_B.

Bhamstudent

Neil phoned me yesterday. No agreement yet, though everything has been submitted. Next update will be Wednesday...

Steve_xx

Bhamstudent wrote: »

Neil phoned me yesterday. No agreement yet, though everything has been submitted. Next update will be Wednesday...

But didn't say which Wednesday, I guess?

FOREVER21

Joe_Bloggs wrote: »

Masonic Said:-


I suspected it was an accidental Ponzi scheme. The investment offer was very very good hence the overwhelming take up. So how do you unwind an accidental Ponzi scheme without losing the trust of those involved in the system ?

J_B.

I suspect that they have already lost the trust of most of us who have taken out NISA with them.

They tell us that they have submitted proposals to the PRA and they are awaing a response.I wonder if this is the case, or have they decided that they can not risk any more deposits at the existing % and they are delaying until the new tax year when they may be more cautious with the rate they offer and the amount they take in.

Personally I was originally dubious at the outset, having had restrictions imposed on them in2011, but decided in view of the FSCS to go with them, now to have restrictions imposed again seems as though the management of the organisation have not learnt from their mistakes.

I await the next missive on Wednesday, but I doubt if I will change my present view and intend to transfer my money to another provider when(if) we get the clearance.
In view of there recent performance I guess I may not be alone, and I hope further "voluntary" restrictions are not imposed.

colsten

I agree, the FSCS guarantee is still a good thing but for me, the trust in DCU has been totally destroyed by their behaviour over the last few months.

It remains to be seen though whether that FSCS guarantee is worth the paper it is written on in the case of the DCU as the FSCS has already washed their hands of any liability based on the fact that DCU haven't been wound up yet.

I eagerly await the DCU letter that tells me what my options are on maturity of my 1-year ISA. If this letter has not arrived by April 5, I will be straight on to the FOS, and probably also to a couple of MPs and to the financial Press.

PS. Thanks for reading our thread, DCU. And absolute and utter shame on you for pretending you never do.

Steve_xx

colsten wrote: »

I agree, the FSCS guarantee is still a good thing but for me, the trust in DCU has been totally destroyed by their behaviour over the last few months.

It remains to be seen though whether that FSCS guarantee is worth the paper it is written on in the case of the DCU as the FSCS has already washed their hands of any liability based on the fact that DCU haven't been wound up yet.

I eagerly await the DCU letter that tells me what my options are on maturity of my 1-year ISA. If this letter has not arrived by April 5, I will be straight on to the FOS, and probably also to a couple of MPs and to the financial Press.

PS. Thanks for reading our thread, DCU. And absolute and utter shame on you for pretending you never do.

It might be only a matter of time before DCU has to be wound up. It strikes me that there's some dithering going on at DCU. Given their excellent 3% ISA offer last year, it is likely that there'll have been a huge take up and I don't think that DCU have the staffing level in place to oversee the successful investment of that amount of cash. Also, it should be considered that all that they have loaned out may not be being recovered. Who knows what level of bad debtors they have. That could make it really difficult for them to satisfy their 3% rate.

Ed-1

colsten wrote: »

I agree, the FSCS guarantee is still a good thing but for me, the trust in DCU has been totally destroyed by their behaviour over the last few months.

It remains to be seen though whether that FSCS guarantee is worth the paper it is written on in the case of the DCU as the FSCS has already washed their hands of any liability based on the fact that DCU haven't been wound up yet.

I eagerly await the DCU letter that tells me what my options are on maturity of my 1-year ISA. If this letter has not arrived by April 5, I will be straight on to the FOS, and probably also to a couple of MPs and to the financial Press.

PS. Thanks for reading our thread, DCU. And absolute and utter shame on you for pretending you never do.

If maturity is 5th May then the terms we signed up to said that the new rate will be announced within 28 days of maturity (link below; i.e. 7th April up to 4th May) and that they guarantee that it will be the best rate available at that time, although the webpage said 28 days before maturity (i.e. by 7th April) as with e.g. the 5 year one: http://www.dotcu.org.uk/creditunion/savings/5yearcashnisa.html. Just another of the discrepancies in information between webpage and terms (just like one said withdrawals subject to X days notice and the other said withdrawals subject to X days loss of interest).

http://www.dotcu.org.uk/assets/images/3rd%20Cash%20ISA%20Summary%202014-2015.pdf

Within 28 days of maturity, we will write to advise you of any amendments to the Terms and Conditions of your Account. We guarantee that we will offer you our best available rate at Maturity. These amendments may include the access terms, withdrawal arrangements and the duration of the Account. Following the day of maturity you have 28 days in which to withdraw funds penalty free, thereafter the maturity Account Terms & Conditions will apply.