Dozens bank account?

18cc

The 'This is Money' podcast has a section on Dozens. Take-away points are:

1. Their inbox is regulariy full of emails from people investing in things they did not fully understand and who have ended up losing much if not all of their capital. Never invest in anything you do not fully understand.

2. yes it can be held in an ISA but it would have to be a S&S ISA it is not repeat not a '5% savings bond'

3. it is marketed on the tube as a 'savings' product but really it is an investment product and it is difficult to evaluate the risk when working out the risk/reward profile. For the risk the 'interest' on the bond should probably be nearer 8-10% than 5% but that is just a guess.

FlyBoy

Does anyone have a view on the fact that they issue cards with a banking system Sort Code and Account Number?
Doesn't that require Regulatory Acceptance and oversight?
I accept that that may not necessarily give protection and authenticity to the 5% Bond, but everything I have read and listened to from Dozens leads me to the conclusion that the 5% Bond is not an investment, but that it's something else I can't quite define.

sendu

18cc wrote: »

it is difficult to evaluate the risk when working out the risk/reward profile. For the risk the 'interest' on the bond should probably be nearer 8-10% than 5% but that is just a guess.

The risk arises from a) them not having a banking license and so not having FSCS protection for the savings, b) you not trusting them because they're a new company, and c) you not trusting that their trustee can really keep your money safe from Dozens if they die.

The funny thing is, given the structure of these bonds (funded by marketing budget), they could easily have offered 8%, or even 14% or 20%! But if 5% was too good to be true, these higher rates would make people even more cautious. In fact the higher the rate, the less you'd trust them, the more risk you'd perceive... and then you'd be asking for an even higher rate to make up for that :rotfl:

5% makes them worth getting off your !!! to sign up to a new app, but isn't so outrageous you dismiss them without even checking the terms.

18cc

That's an interesting concept - pay LESS return on a risky investment so that people won't realise how risky it is. Wish I'd though of that...

ozaz

Laurent wrote: »

Does anyone have a view on the fact that they issue cards with a banking system Sort Code and Account Number?
Doesn't that require Regulatory Acceptance and oversight?

I don't know the rules involved, but several other non-bank 'fintechs' provide sort codes and account numbers. For example, Revolut and Transferwise.

SnowTiger

Laurent wrote: »

Does anyone have a view on the fact that they issue cards with a banking system Sort Code and Account Number?
Doesn't that require Regulatory Acceptance and oversight?
I accept that that may not necessarily give protection and authenticity to the 5% Bond, but everything I have read and listened to from Dozens leads me to the conclusion that the 5% Bond is not an investment, but that it's something else I can't quite define.

I have a Dozens account.

The 'back-end' is provided by Wirecard. Several other prepaid cards and accounts use Wirecard.

I currently have a complaint filed with the FOS about Loot, which also uses Wirecard. In their reply to me, the FOS refers to WDS (Wirecard) rather than Loot itself.

If you drill in to the details you'll discover that Dozens offers investments, not savings.

https://dozens.com/help/save/#save:

Could I lose my money?

Our investments are designed for the long term, ideally 3-5 years or more. The longer you hold your investment, the more likely you are to weather market highs and lows and see a good return - but this isn’t guaranteed.

Do my investments have FSCS protection?

Yes. Should there be a form of default or misselling of investments, up to £50,000 of your money will be protected by the Financial Services Compensation Scheme (FSCS).

https://dozens.com/blog/our-5-bonds-everything-you-want-to-know/:

With investments, the level of protection is £50,000 per person, per authorised firm.

For example, if you lost money because an authorised firm gave you bad advice or negligently managed your investments, you would be covered for up to £50,000 if the firm fails.

https://protected.fscs.org.uk/banking/how-is-your-money-fscs-protected/:

With investments, the level of protection is £50,000 per person, per authorised firm.

For example, if you lost money because an authorised firm gave you bad advice or negligently managed your investments, you would be covered for up to £50,000 if the firm fails.

Crucially, you are not protected if the companies you invest in go bust.

The £50,000 protection offered by the FSCS is only applicable in specific circumstances.

Investors in a Bond offered by another company have discovered their investment is almost worthless.

https://www.bbc.co.uk/news/uk-england-47454328:

Thousands of people who invested in a high-risk bond scheme marketed as a "Fixed Rate ISA" fear they have lost everything after the company collapsed.

London Capital & Finance (LCF), now in administration, took £236m following a marketing campaign that is now under investigation for mis-selling.

Many were first-time investors - inheritance recipients, small business owners or newly retired.

Administrators said investors could get as little as 20% of their money back.

[...]

The FCA said it was "unlikely" investors would be protected under the Financial Services Compensation Scheme (FSCS) but it was "for the FSCS to determine".

Beware.

FlyBoy

From the dozens FAQ's:

"IS MY MONEY OR CAPITAL AT RISK WHEN I BUY FIXED INTEREST BONDS?

No. We’ve taken the security of your money very seriously and structured our bonds so that the value of your bonds is not at risk.


Once a bond is issued, we place an amount that’s equal to your bond money plus 12 months of interest in a ring-fenced, trustee-controlled account. The money is held there on your behalf. In the highly unlikely event of a default by dozens or a third party, this money would be used to pay back your initial amount plus interest.


For further peace of mind, bear in mind we’re regulated by the Financial Conduct Authority (FCA). If for some unfortunate reason we default or cease to exist, you have protection from the FSCS of up to £50,000 for your bonds."




Does anyone consider that there are any lies in this answer?
Given the structure stated by them is/are there any other risk(s) that might loose me my capital that they have failed to mention?

SnowTiger

Laurent wrote: »

From the dozens FAQ's:

"IS MY MONEY OR CAPITAL AT RISK WHEN I BUY FIXED INTEREST BONDS?

No. We’ve taken the security of your money very seriously and structured our bonds so that the value of your bonds is not at risk.


Once a bond is issued, we place an amount that’s equal to your bond money plus 12 months of interest in a ring-fenced, trustee-controlled account. The money is held there on your behalf. In the highly unlikely event of a default by dozens or a third party, this money would be used to pay back your initial amount plus interest.


For further peace of mind, bear in mind we’re regulated by the Financial Conduct Authority (FCA). If for some unfortunate reason we default or cease to exist, you have protection from the FSCS of up to £50,000 for your bonds."




Does anyone consider that there are any lies in this answer?
Given the structure stated by them is/are there any other risk(s) that might loose me my capital that they have failed to mention?

My understanding is that the current bond issues are very small and limited.

Logging in to my account I note there are none available to me (at the moment).

I think current bonds are a 'loss leader', funded by crowdfunding: https://dozens.seedrs.com/.

Dozens suggest that if they default or cease trading the FSCS will step in to compensate punters.

The FSCS offers a different take on this:

You must have lost money as a result of the advice you were given.

And:

With investments, the level of protection is £50,000 per person, per authorised firm.

For example, if you lost money because an authorised firm gave you bad advice or negligently managed your investments, you would be covered for up to £50,000 if the firm fails.

Crucially, you are not protected if the companies you invest in go bust. The same applies if you buy a fund and it performs poorly. FSCS does not cover this. That’s the investment risk you take.

Dozens, itself, says punters money and interest is all stored away in a segregated account. If they went bust and the money (plus interest) wasn't available I guess the advice they gave could be considered "bad".

FlyBoy

If it's of any interest:

FlyBoy

Oops