Dot ComUnity Credit Union - ISA

Archi_Bald

Those wanting to complain about the PRA/FCA: email is complaints@fca.org.uk

MARTYM8`

Archi_Bald wrote: »

We don't know what their financial state is so that's just a guess - you may be right, you may be wrong. I for one don't believe it when the credit union says they have enough funds.

Between 1 April 2014 and 30 September 2014 their deposits increased from £1.3million to £4.3million – an increase of nearly 350% in six months. This we must deduce is almost entirely down to the ISA deposits they received.

Given I suspect most people invested in 1 year ISAs you have an organisation which would lose nearly 70% of its assets/cash if all those depositors decided to withdraw their funds when their ISAs mature. Much of that I would suspect relates to maturities occurring on 5 May. Given recent events I can’t imagine many people will opt to stay with them any longer than they need to.

So in effect as soon as they remove their voluntary restrictions there will be a run on the bank and the credit union will run out of cash pretty quickly (e.g. within days).

They are effectively equivalent to a patient in a coma – with the voluntary restrictions being equivalent to the equipment keeping them alive. Once the voluntary restrictions end – there is only one possible end. So why prolong the agony – its surely inevitable? Surely the regulators much be aware this is the case – so why aren’t they forcing the issue?

Mr_Doubtfire

I came across the following on the Prudential Regulation Authority website regarding credit unions (PRA -> Supervision -> Credit Unions). It makes for interesting reading, particularly the first two paragraphs of 2014 Q1 update.


2014 - Q2

Credit unions are not the same as Banks and Building Societies

The PRA has noted that a number of credit unions are marketing themselves – particularly on their websites – as offering similar services to those offered by banks and/or building societies. The PRA has also noted a number of credit unions stating on their websites that they are subject to a similar regulatory regime to banks and/or building societies. In making these statements, credit unions are misrepresenting their situation and the products and services they can offer their members. Credit unions should consider whether statements on their websites are appropriate and take steps to ensure the description of services offered is accurate.

2014 - Q1

Interest-bearing shares - relevant to credit unions in Great Britain only

Interest-bearing shares give the member the right to a contractual rate of interest – regardless of the profits of a credit union. Credit unions should not advertise a specific rate (of dividend or interest) on shares that are dividend-bearing. In doing so, they are creating an obligation to pay a specific return to their members, but are doing so without meeting the conditions for issuing interest-bearing shares. If a credit union wants to advertise a specific rate, it should issue shares that are interest bearing. The rules in respect of the payment of interest apply irrespective of whether shares are held within an Individual Savings Account.

Before issuing interest-bearing shares the credit union must check that its registered rules allow this and that the credit union has submitted annual audited accounts to the PRA showing that it holds reserves of at least the higher of £50,000 or 5% of total assets. It is important to note that reserves are not the same as regulatory capital and subordinated loans and provisions for bad debt will not count towards the reserves figure.

The credit union must also secure its auditor’s confirmation that it satisfies the conditions specified under section 7A(1)(b) Credit Union Act (CUA) 1979 using this report. The report must be submitted to the PRA before a credit union issues interest-bearing shares (initial report), and then after each financial year end of the credit union (annual report).

The annual report must be submitted by the due date for submission of the credit union’s annual supervisory return (CY). Credit unions are also required to notify the PRA using this form.

gwapenut

And with the proposed dividends replacing interest, then any ISAs held during the coma period may be eventually reimbursed by the FSCS - but they will not receive any interest between the date of maturity and the date support is switched off.

If DCU go under after 5 May, it is with an interest free loan.

masonic

Mr_Doubtfire wrote: »

For those of you with a lot of experience of the MSE forum, is it unusual for posts like these to be deleted? Could all the subsequent posts from "DotComUnity" now be deleted from the thread and the content lost for good?

It is most likely that DotCon have come back to delete their own posts containing information that they no longer wish to be known. The telltale signs of MSE coming in and deleting content is that not only the posts in question will disappear, but posts containing quotes from the ones deleted will be edited to remove the quoted text.

MARTYM8`

masonic wrote: »

It is most likely that DotCon have come back to delete their own posts containing information that they no longer wish to be known. The telltale signs of MSE coming in and deleting content is that not only the posts in question will disappear, but posts containing quotes from the ones deleted will be edited to remove the quoted text.

For what they are worth I have retained copies of the terms and conditions DotCon published on their website when the ISA products were launched last spring. They now appear to have absolutely no terms and conditions whatsoever it seems – which is rather extraordinary – and none were referenced in the maturity letter as has been pointed out. It also seems they are trying to erase history here - and pretend those terms never existed.

They are now – with effect from 5 May – retaining our funds for free as no dividend is likely to ever be forthcoming given their financial situation. Where do we go from here – they are effectively holding us hostage.


Given that Fearne Cotton is now the face of the FSCS – maybe she can help?
https://www.youtube.com/watch?v=g9Fp7Fv43YA


PS Here is today’s latest missive from DotCon on their facebook page – would anyone like to complete the sentence…..

“Today it’s possible to do good, to act socially, really change the world, and in the same process achieve your individual goals....”

colsten

Still no maturity letter for me today. Has anyone apart from Archi actually received one?

MARTYM8`

colsten wrote: »

Still no maturity letter for me today. Has anyone apart from Archi actually received one?

I have – although as with Archibald the date of posting was more than a week after the date of the letter. It was sent first class however.

colsten

I feel that those affected by this shambles would benefit from being able to have discussions that aren't open to the public, and to share information such as the original T&Cs.

I have set up a closed Google Group for this purpose - anyone wanting to join, please PM me with your @gmail.com email address so I can give you access (I don't think it works with a non-gmail address, but gmail addresses are easy to get by the dozen)

I will initially apply my own judgement as to whether you are an affected ISA holder but hopefully other members will soon be able to join me in vetting requests for Group membership.

I will process your requests asap but please bear with me as I am not 24 x7. I am normally about mid-morning and early evening but I will attend to any requests with priority.

colsten

User Mr Doubtfire has applied for membership in the private Google Group.

As his user name implies, there's doubt and there's fire.......I am very tempted to accept him into the private group but there's this doubt based on is first post.....I wanted to add a poll to this pst but for some reason MSE won't allow it