Dozens bank account?

FlyBoy

Grrrrr
From the FCA Register:



NameTrading/Brand Names (May include Previous Names)Type of business or individualReference numberStatus Project Imagine Ltd ( Postcode: E1W 1UN) Dozens
E-money
900894Authorised Electronic Money Institution

FlyBoy

Name: Project Imagine Ltd ( Postcode: E1W 1UN)


Trading/Brand Names (May include Previous Names): Dozens


Type of business or individual: E-money


Reference number: 900894


Status: Authorised Electronic Money Institution

londoninvestor

Laurent wrote: »

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?

This sentence is pretty misleading:

dozens wrote:

"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."

This sentence is narrowly true when 'we' is interpreted to mean Project Imagine Ltd, the operator of the dozens platform. But the bonds aren't issued by Project Imagine Ltd, they're issued by a subsidiary, Dozens Savings plc. If that entity defaults, you have no FSCS protection.

So if you pay your cash into Dozens to buy the bonds, and they aren't actually purchased for you from Dozens Savings plc, then yes the FSCS will compensate you for up to £50k. If however you do take ownership of a bond but it fails to pay interest or repay the principal at maturity, you have no recourse to the FSCS.

As I said in an earlier post, most customers are not going to appreciate this distinction from the information given.

So this product is riskier than an FSCS-protected savings account, where if the bank cannot repay your deposit - for any reason, whether it's administrative incompetence, or fraud, or poor commercial decisions, any reason at all - the FSCS covers your loss up to £85k.

How does it compare to other products which look a bit like savings but aren't FSCS-protected? (Chip, for example, or indeed the "Spend" rather than "Save" section of dozens)? That's an interesting question...

• Chip (for example) is an "e-money" product, which means the provider has to ringfence your money in a separate bank account and not mix it with its own funds - that's a condition of the e-money licence from the FCA. However, if it somehow fails to do that, your money is at risk. You have to trust that the provider is indeed doing what they say around ringfencing.
  
• The Dozens "Trust Bonds" are not themselves regulated - i.e. segregating the funds into a custody account isn't a regulatory requirement, it's part of the T&C of the bond that you have agreed with Dozens. Now, what the "Trust Bonds" have which Chip et al don't is a credible third-party custodian, who you would expect to raise a red flag if the money from purchased bonds isn't properly segregated.

So my personal view is that the Trust Bonds, while riskier than FSCS-protected savings, are less risky than the "e-money" products which several fintechs are offering.

Dozens don't help themselves (again my personal view) though by creating complex structures, shading around the details of what is and isn't protected, and (prior to late January) treating the Trust Bonds and the emerging market debt-linked product as if they were essentially the same product.

londoninvestor

SnowTiger wrote: »

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

Any idea how much per month you can get in there?

You can of course put £250 a month into a Nationwide (FSCS protected) Regular Saver and get 5% interest on that...

sendu

SnowTiger wrote: »

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).

There's £7m worth of them, with 1 issuance a month. Sizes vary. The first one in Feb was £100k, March's will be £1m. The March one got delayed because they want to wait for more people to get access to the app (in particular, people who invest via Seedr, since there's a reserved portion of the issuance for them).

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

Loss leaders yes, but not funded by crowdfunding. For the first issuance at least, and I think for the rest as well, its prefunded by VC money.

londoninvestor

18cc wrote: »

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.

Reading the ThisIsMoney article, it's not clear the writer has absorbed that the Trust Bonds are backed by money deposited with the trustee, as opposed to the emerging market bond product that Dozens are going to offer, which does indeed have investment risk depending on how the loans perform. (That was unclear from Dozens' own website in late January when this thread started up, but it is more clearly described now.)

While the Trust Bonds aren't true savings products, they're not exactly investments either (as Laurent says). There are risks involved, but those risks are about the segregation and custody process working correctly, rather than any dependency on market performance.

sendu

londoninvestor wrote: »

Any idea how much per month you can get in there?

The results of the first issuance are here.

Their aim for these bonds is to prioritise those with only a little money to invest. Each month there's a total value of bonds everyone can bid for. The minimum bid is £100. Winning bids will be by order of priority those that are smaller, and then those that were placed earlier.

So if the total was £1000, and 11 people bid £100, 10 people would succeed and the last to bid would not. If 1 person bid £1000 and 1 person bid £100, the person who bid £100 would win, and £900 would go unused.

What this means is, as Dozens get more and more customers activated, winning bids will tend downward to £100. For now you can get away with £1000+.

londoninvestor

sendu wrote: »

The results of the first issuance are here.

Their aim for these bonds is to prioritise those with only a little money to invest. Each month there's a total value of bonds everyone can bid for. The minimum bid is £100. Winning bids will be by order of priority those that are smaller, and then those that were placed earlier.

So if the total was £1000, and 11 people bid £100, 10 people would succeed and the last to bid would not. If 1 person bid £1000 and 1 person bid £100, the person who bid £100 would win, and £900 would go unused.

What this means is, as Dozens get more and more customers activated, winning bids will tend downward to £100. For now you can get away with £1000+.

Got it - thanks for sharing and explaining!

FlyBoy

March's issuance is £1,000,000GBP, so they tell me on the phone.
I'm beginning to have my doubts about whether my money will actually be covered by FCA or FSCS in absolute certainty.

I remember something I learnt years ago about MS NT operating system in business use: every time they released a new unique number version (NT1.0, NT2.0, NT3.0, NT4.0, etc...), smart companies would let others use it for a while, like guinea pigs, find all the bugs and crashes, let MS fix it and then only install it as the n.1, as in NT4.1.
So, looks like I'll be observing what happens for a minimum 6 months...

sendu

Laurent wrote: »

I'm beginning to have my doubts about whether my money will actually be covered by FCA or FSCS in absolute certainty.

Dozens are, with absolute certainty, authorised and regulated by the FCA. Again with absolute certainty, you get FSCS protection, but only in the case of Dozen's misselling or default, and only up to a value of £50k.

That's different to what you'd expect from a normal savings account at a bank. Since you don't get normal FSCS protection on your money, Dozens instead are putting the money in a trustee controlled account, safe from Dozens, intended only for you. You will have to decide if that's enough reassurance.

I don't think waiting 6 months will tell you anything. Or even a year. You'd have to wait until some disaster (eg. Dozens goes bankrupt) to see if people actually got their money back. It's more likely that these bonds will have run out and completed and everyone went home happy, before any disaster occurs, if a disaster occurs at all.

If you're cautious and don't want to take any risk, wait until Dozen's get their banking license and offer some new savings product that has the full "normal" FSCS protection you're used to.