Shepherds Friendly MVR Warning

conbee

The product was sold as low risk, and 5 yrs is the term they recommended.
So on both fronts the product failed.
Low risk
5 yrs
I accept nobody predicted this covid and that has been the big issue.
To levy a 20% MVR cannot be justified. 

bowlhead99

conbee said:

The product was sold as low risk, and 5 yrs is the term they recommended.
So on both fronts the product failed.
Low risk
5 yrs

The investment is not sold as low risk. The marketing has always described it as low-medium risk ; it generally offers smooth performance in normal market conditions, but in stressed conditions there can be a market value reduction to reflect the reality of investing in a mixture of shares and bonds and other financial instruments, and it is not low risk or no risk.

They offer it as a medium to long term investment and do recommend to hold it for not less than 5 years. The current illustrations in the key information documents (which are more detailed than they used to be) show that in a stressed situation, someone putting in a £10k lump sum might get back less than £7k after five years while someone investing £1k a year for five years might have less than £4k to take away.  So, just because you hold it for the very barest minimum amount of time that they could possibly recommend, you would not expect to always make a profit on that. If you wanted a known value for a house deposit you would have put the money in a cash deposit account with a known and positive interest rate

I accept nobody predicted this covid and that has been the big issue.
To levy a 20% MVR cannot be justified. 

That seems like you are contradicting yourself. If they can levy a market value reduction in times of stress (which the T&C of the product has always said they can), and you "accept that nobody predicted this covid and that has been the big issue", then I don't know why you think they cannot justify a market value reduction, or that it could not be 20%. 

The FTSE100 is certainly down over the last year even including dividends, and at the end of April (relevant if asking for a withdrawal in May) it was down 21% year to date while the FTSE250 was down 24%. In such times it is quite rational for them to apply a 'haircut' to the value of the fund which had been bumped up positively with 'bonuses' despite the markets at that time being in turmoil.

dunstonh

The product was sold as low risk, and 5 yrs is the term they recommended.

They do not provide advice and do not make recommendations.  They market a product direct to consumer.

The investment is low/medium and not low risk.

5 years is the minimum you should consider for a single premium.  10 years for a regular.   It doesn't mean you will not end up in  a loss position.  Statistically, there are very few 5 year periods (where ALL of the money has been invested for 5 years - not part of it) where you would be in a loss.

I accept nobody predicted this covid and that has been the big issue.

Yes they could.   There have been a number of global pandemics in the last 50 years.   They are not a new event.   And in terms of the stockmarket, Covid hasn't been a big issue.  Its only the third worst drop in the last 20 years and unless you are heavy in UK equity (which is down for other reasons) then you would likely be back in profit again.   

Financial crisis occur, on average, every 7 years.  Market falls are pretty regular.   You always know that something is coming.  You just don't know what it will be specifically or when it will happen.

To levy a 20% MVR cannot be justified. 

The markets fell around 35% on average.   And still down for UK equity.   As bowlhead says, the figure they used at that point was in line with expectation and entirely justifiable.

This is not to say it is a product that any experienced or knowledgeable investor would use.  It's expensive and old fashioned.  But you did your research and decided to buy it anyway and it has done exactly what it says it could do.

P3

I opened mine in April 2018 and got £105 cashback from TCB

Didn't put attention to it once cashback was paid. Total invested £300, now up to £311. Was looking to see if there is any documents, nada.

Trying to find how to withdraw it out, and come across with this MVR, doesn't say the % online, then saw this thread, wow 20% what a rip off.

How can this company able to run. No one should use this except for the cashback, even then you have to think twice

They should list the MVR rate on their website, so their member can keep track, I don't know if it is still 20% now or this is a scare tactics to scare member to keep money with them

dunstonh

Trying to find how to withdraw it out, and come across with this MVR, doesn't say the % online, then saw this thread, wow 20% what a rip off.

Its not a rip off.  If you draw the money out when the underlying fund is worth less than you paid in, then you suffer an MVR.    The fund is UK equity heavy and UK equity is down over the period you mention.

How can this company able to run. 

The company doesn't have a say in how the stock markets perform.

No one should use this except for the cashback, even then you have to think twice

Trying to use risk-based investments in a short term period to gain a cashback is risky.

They should list the MVR rate on their website, so their member can keep track, I don't know if it is still 20% now or this is a scare tactics to scare member to keep money with them

It is not "scare tactics".   Its logical implementation of a restriction to protect other investors.

If you opened the Bonus plan, then they went obsolete around 1995.  And the fund method is old fashioned.  However, when you buy investments that are aimed for a 10-15 year term to allow them to average out the ups and downs, you have a high risk of a loss value in the first 5 years.

P3

It is now 10% reduction, confirmed via email

DragonQ

P3 said:

It is now 10% reduction, confirmed via email

Who did you email to find this information? I emailed their customer services team about 7-8 weeks ago and never received a reply.

hashman2

DragonQ said:

P3 said:

It is now 10% reduction, confirmed via email

Who did you email to find this information? I emailed their customer services team about 7-8 weeks ago and never received a reply.

called them today as i emailed the withdrawals team with no reply

i was told they have upgraded their systems and there is a tech issue resulting in backlog - but they will revert back to me.

i assume it is 10% MVR currently - and if it is - i will probably exit as cashback paid last month so happy days!