Dozens bank account?

KittenMelt

Anyone heard of Dozens bank/app? It has a 5% bond and you use the account as a current account as opposed to a savings one. Seems to good to be true? There may be a catch somewhere but this would put the app/bank quite high in terms of the interest it offers. They also have FSCS protection but only up to £50k. Anyone already have it? Or have any thoughts? Can’t post the link yet as I’m a newbie

eskbanker

https://www.dozens.com/blog/our-5-bonds-everything-you-want-to-know/ mentions that the 5% bond is an investment product rather than savings as such (hence the lower FSCS cover) but doesn't seem to spell out the consequences of that, in terms of capital being at risk, which is what you'd expect the FCA would insist on them doing.

They even pose the question (in red) about the value of the investment, and then fail to actually answer it:

But is my money safe?

When putting money into any investment products, there are two main factors for you to consider – whether the company you made the investment with can meet its financial commitments, and whether the investments you made will fluctuate in different market conditions.

The interest offered by our fixed interest bonds will not fluctuate even in different market conditions. However we understand that you will still need to be comfortable that as a new company, dozens will be able to meet its financial obligations. Because of this, and to help build your trust in us, for the first £1 million bonds sold we will place an amount of money equal to the amount you invested plus the full 12-months interest, in a separate trustee-controlled account held on your behalf in case of any default.

And remember, you are covered by the Financial Services Compensation Scheme for up to £50,000 for our misselling or default.

As ever, if it looks too good to be true....

HappyHarry

eskbanker wrote: »

And remember, you are covered by the Financial Services Compensation Scheme for up to £50,000 for our misselling or default.

i.e. If the people that dozens lend the money to default, then you have no FSCS protection.

Shedman

5% bond does sound a bit iffy and certainly seems too good to be true given that its a fixed 1 year bond and yet you can cash them in at any time with minimal loss of interest...hmmm

Plus I'd probably confuse the Mango Yellow debit card with my AA card :rotfl:

HappyHarry

Just to add, FCA register says company can not currently hold client money.


https://register.fca.org.uk/ShPo_FirmDetailsPage?id=0010X00004DA7B0QAL


There are no Terms and Conditions available on the dozens / Project Imagine Ltd website at present, though there is a suggestion these may be available when you sign up via their app.


Best guess at present is that dozens / Project Imagine Ltd will place your funds with other banks, and the bonds are loans to other institutions that may or may not be secure.


dozens / Project Imagine Ltd are not listed on the FSCS checker for banks/building societies, so there is no indication at present that the current account has any FSCS protection.


https://protected.fscs.org.uk/tools/check-your-money-is-protected/


This is clearly early days for the company (incorporated January 2018), but their 5% bond promotion does not currently appear to be following FCA rulebook on promotions being fair, clear and not misleading.

Shedman

I notice that one of their senior staff has the title of "VP Storytelling".....it does all seem a bit of a fairytale

eskbanker

Re their consistent stylised use of lower case when referring to themselves on their website, and presumably elsewhere, I'd observe that:

When it comes to institutions that deliberately try to hoodwink savers into investing, dozens crash and burn, losing their customers' money....

londoninvestor

eskbanker wrote: »

When it comes to institutions that deliberately try to hoodwink savers into investing, dozens crash and burn, losing their customers' money....

Especially given the holier-than-thou claims of the company about remaking the world of banking, being on the customers' side, not like those bad old traditional banks etc etc etc...

This one is a bit more transparent than other capital-at-risk bond offerings - which is good in itself - while at the same time it manages to be more disingenuous in the way it presents itself and tries to get your trust. Let's have a look:

dozens wrote:

However there are, and always have been, much higher interest rates in the market, they’re usually reserved for individuals who are able to deposit very large sums of money in one go. Therefore they’re not available on the high street or even known about by many people.

This doesn’t feel fair though does it? We all work hard to put money aside. Whether you have £100 to save or £1 million surely you should be able to see the money grow at the same percentage rate.

a) Social Engineering Trick #1 - this 'secret investments for rich people' narrative is literally how prime bank scams suck people in!

b) It's just not true. In fact, small savers generally get slightly higher risk-free deposit rates than large players and institutions. You can get a 1.5% instant access account with Marcus - that's better than the 0.68%ish* that HSBC get for an overnight GBP loan to Goldman.

* approximately the current overnight GBP LIBOR rate

c) Can these shadowy rich people get higher rates? Well they can - but it's by taking risk. As we're going to discover here...

dozens wrote:

Should you wish to take your money out before the 12 months are up, you can sell your bonds to us at any time. You will receive all your money back, and the interest you’ve already been paid won’t be affected. ... You will be selling the listed bonds to our holding company Project Imagine Ltd.

Now this is better than other capital-at-risk bonds. But, if you start to worry when credit markets are going the wrong way and the bond's underlying investments are underperforming, will Project Imagine still be a going concern to buy your bonds back? That probably depends on how much it can build its other businesses and not rely solely on this bond product line.

dozens wrote:

Dozens Savings PLC purchases a large amount of bonds on behalf of the business, they have a high interest rate as we buy many in one go. Then, and this is the magic bit, we create our own smaller £100 bonds, we include bond listing and add security protections, and then make them available to purchase individually. In this way we have made the high interest rates normally reserved for the wealthy accessible to anyone with £100 to save.

So that’s how we make high interest rates available to you, but you may be wondering, where do we find these high interest bonds in the first place?

Well currently in the UK, interest rates for both savers and borrowers are very low. Our economy is growing just a little every year. However there are parts of the world where the economy is steaming ahead – new businesses are being formed, new jobs are being created, individuals’ wealth is growing – this means the interest rate is likely to be higher. Anyone who wants higher interest rates on their money has to head to these economies because this is where borrowers pay higher interest rates on loans.

We work with professional investment companies in these economies, who manage the bonds we purchase and the business loans they’re built on. They have their own sophisticated risk management systems that ensure any businesses they’re lending to are high quality borrowers. The funds we select have an incredibly good track record and have been returning high returns year after year

So the product is - a CDO made of emerging markets bonds!

Wow, we've come quite a distance from a savings account or fixed-term deposit!

dozens wrote:

The interest offered by our fixed interest bonds will not fluctuate even in different market conditions.

But the probability of capital loss very much will fluctuate (as eskbanker said).

dozens wrote:

Because of this, and to help build your trust in us, for the first £1 million bonds sold we will place an amount of money equal to the amount you invested plus the full 12-months interest, in a separate trustee-controlled account held on your behalf in case of any default.

Social Engineering Trick #2 - create a sense of urgency, by promising special terms for the first customers to apply. (In fairness they do say the first tranche will be only £100k, so in practice you probably have a little while to get in on the first £1m.)

dozens wrote:

There must be a catch, somewhere in the smallprint?

Nope. No smallprint. It’s all here.

Well, there are some things that I can't find on the website but should be in the small print!

a) The KIID. It would be interesting to see how they've risk rated it.
b) The securities note / prospectus.
c) The standard stuff the FCA mandates: statements about capital at risk, past performance not implying future performance (to balance the claim made about "high returns year after year"), etc

If we had those, we might be able to judge the "catches" for ourselves.

eskbanker

rob_dozens wrote: »

We've taken note of your questions and thought we'd answer some of these and maybe explain more about ourselves, so we put together a video where I talk to our CEO and our General Counsel, and posted it in our 'weare' community. If any of the issues in this thread are still of interest to you, then please feel free to take a look. We'd love to know if this answers your questions, or if you have any others.

Perhaps I don't fit your target demographic but I wouldn't dream of sourcing definitive info about a financial institution's products from a video.

Assuming it answers the real questions above about lack of transparency, poor compliance with FCA regulations, etc, rather than just promotional marketing bumf, are you planning to post a transcript or equivalent textual info on your site or on here?

glaister

I've seen a couple of adverts for dozens on the Tube over the last few days.

The adverts are quite misleading. The main claim in the advert was that dozens offer a 5% bond which is better than the best interest rates banks can offer at 2%. Of course, comparing an investment product's interest rate to that of a savings account is apples and oranges.

Most egregious part of the advert (for the moneysaver in me anyway) was that the advert cited the MSE website as evidence for the claim that the best interest rate you can get from a bank is 2%.

All moneysavers know that current accounts and regular savers can offer much better interest rates than that: many have a 5% interest rate that matches dozens. The MSE website goes on and on about it. Its not really fair to cite the MSE website to say that the best interest rate with banks is 2%.

(Apologies for resurrecting an old thread, thought it was better than starting a new one)

eskbanker

glaister wrote: »

Apologies for resurrecting an old thread, thought it was better than starting a new one

Glad you did - I'd forgotten about this mob! Following on from the above dialogue from last month, I've just been back onto their site and find it in much the same state as before, despite their rep's assertion that they'd improve transparency.

Pointing people towards videos and blogs on communities, etc, is all well and good but isn't the level of visibility that the FCA will expect, so it'll presumably only be a matter of time before they're taken to task over the lack of clarity.

The community is a typical fan-fest of (let's say) like-minded individuals and it's noticeable that when someone asks more searching questions they're completely ignored. Community user kthomas asked on 24 January:

Hi @robert, really interesting reading the blog post. Some inferences and questions that I had:

1. If I have understood this correctly, are there are likely to be 10 issuances of £100K to reach the £1 million set aside?
   
2. Essentially having read the blog post, what you seem to be offering is in effect a hedged emerging markets corporate bond fund. Just marketed differently. Would you agree with that assessment? If you do agree with this, would you not consider this asset class the highest risk bond class?
   
3. Given this, I think the most important thing for me is the oversight of the trustee controlled account which in effect is the back stop against any capital loss. Are the board of trustees going to be independent of Project Imagine and run at an arms length so that in the (hopefully unlikey) case of Project Imagine going bankrupt the administrators would not have access to this to pay to creditors? I think transparency here is really important.
   
4. It seems to me that the 5% bond is a “mini-bond” product - i.e. the money that I put in is a loan to you which you then take and lend on wards. Is that correct?
   
5. I also think you should be much clearer. Although Project Imagine/Dozens is regulated by the FCA, is the bond a regulated product? Reading between the lines, if it is a “mini-bond” I think not.
   
6. As I’m sure you are aware, regulated bond products have to prepare detailed statements and prospectuses which mini-bonds do not (they are essentially a black box which investors have to take on trust). I think it is very important to show that you are going to provide at least the same level of transparency i.e. will you be detailing exactly what the bond will be investing in?

I do think the thinking behind it is laudable but I fear that a lot of people on here are essentially thinking that this is similar to a 5% savings product with similar risk but I think the risk is much higher. Will I buy any bonds? If I am satisfied regarding the trustee account, probably, because in effect dozens is taking the capital risk and not me. However, once that is taken away I don’t see what the advantage of the dozens bond would be over a regulated emerging markets corporate bond fund although I would be happy to be convinced otherwise.

Thanks
Kevin

and as yet hasn't received any sort of (visible) reply, although another user has highlighted the lack of response yesterday so maybe that'll nudge them into action....

So, if rob_dozens reappears on here, perhaps he'd be good enough to comment on the issues raised by londoninvestor last month and to advise when there'll be a properly-constructed website available to view meaningful documentation rather than trying to throw people off the scent by pointing them to videos....