Dozens bank account?

I too saw the tube adverts and read the website. It looked to me like the funds were pretty much as safe as a bank regular saver so thanks to everyone who has contributed to this thread for clarifying further. I found there "this is basically a loss-leader" to be very reassuring so it is really helpful that there are better informed and more financially aware people who post here.

18cc wrote: »

https://www.dailymail.co.uk/money/saving/article-6772661/What-Dozens-advertising-5-savings-rate.html

"A 5% fixed-rate 'savings' deal? Dozens advertises a bumper rate 'for people just starting to save' - but those tempted should tread with caution"

I should think that a negative piece like that would have quite an effect on this company, as I'd imagine there to be quite an overlap on a Venn diagram featuring Daily Mail readers and gullible punters....

Predictably disappointing (or disappointingly predictable) response from the FCA:

What does the FCA say?

We contacted the FCA for clarification about the protections available to customers who might end up investing in Dozens.

We also asked whether the FCA believes the advertisement to be clear and not misleading, due to the fact the five per cent rate appears to be marketed as a 'savings' product.

However, it told This is Money that it does not comment on individual firms and their advertising.

aka 'What does the FCA say? Nothing, until it's too late'....

Addressing some of the outstanding questions raised in the thread:

Rob still claims he's waiting for verification.

The 5% bonds in the "save" section of the app are not invested in anything underneath; the 5% comes from essentially marketing budget.

They have been set up as bonds and not a normal savings account because Dozens do not yet have their banking license. This was a way to offer something "safe" to get new customers while they wait to get one.

Their regulatory filings can be found at their website address with "/nex" added (sorry, as a new poster I can't add links).
In particular, the money for the 5% savings bonds is held in a trustee controlled account. The trustee is "U.S. Bank Trustees Limited", and the money is held in a secured account by "Elavon Financial Services DAC".

When you bid for a bond in the app, you see the full terms and conditions. I skipped through and can't remember what was there, but I suspect all the required warnings and such were there.

The "invest" part of the app hasn't been enabled yet, but the plan is that before people are allowed access they will go through a risk profile questionnaire and have to state they have a certain level of savings, before being allowed to invest.

Disclosure: I am a normal customer of Dozens. I've put some money in to their first bond issuance, and plan to put money in to each subsequent one. I am also putting a small amount in to their crowdfunding on Seedr, which opens to the public tomorrow.

I know that investing in any start up is a stupid idea, but the small amount I'm investing is "just for fun", and in a company I believe in since they have a great product that I know other people are also going to like.

I wouldn't say I "like" high-risk, no. Which is why my other thread that you linked to asks if there is a non-scam (low risk) variety of that kind of investment.

sendu wrote: »

I neither feel mislead, nor do I get the impression they are trying to mislead anyone. They are probably forward looking in their presentation of things, given their anticipation of getting their banking license.

Now, without knowing any of the people involved, I'm very open to believing that they're not trying to mislead anyone, and that they have a genuine sense of positive mission. That can be a double-edged sword though - if you're very convinced of the righteousness of what you're doing, you may be less likely to question yourself.

These things could all be clearer though:
1) The tube ad in the Daily Mail article implies that the bond product is a savings account. "dozens is on a mission to make sure your hard earned savings are not losing value. So we've created 5% pa fixed interest bonds". The majority of people reading that will surely assume this is a fixed-term deposit as offered by many banks and building societies.

2) Nothing in that tube ad says that your money isn't FSCS protected. It doesn't state that the money is protected, but by giving the implication it's a savings account, it will lead many people to assume it is.

Now, the website says "for both the fixed interest bonds or our strategies you are covered by the Financial Services Compensation Scheme for up to £50,000 for our misselling or default". That "our" is pretty misleading. The FSCS would indeed cover misselling or default by the operator of the dozens platform (i.e. Project Imagine Ltd, trading as dozens). It does not cover default by the special purpose vehicle entity that is the issuer of the bond (Dozens Savings plc).

That's not out of line with investments generally (for example, if I buy a corporate bond through Hargreaves Lansdown, I'm protected by the FSCS up to £50k if HL loses my money, but I'm not protected if the issuer defaults on the bond). But not what many readers will assume what is meant by "our default" on the dozens site.

3) As it happens, I do think the bonds are pretty safe! The trustee is a subsidiary of US Bancorp, which while not well known outside the US is a reputable operator of such things. But to understand the structure and conclude that the risks are indeed minor, you need a pretty detailed understanding of finance. So it's questionable to be marketing the product to people "just starting on their savings journey".

Indeed, the bond documents (here, page 10) state:

Dozens_bond_document wrote:

RISKS RELATING TO THE STRUCTURE OF THE BOND
The Bonds may not be a suitable investment for all investors

Each potential investor in the Bonds must determine the suitability of that investment in light of his or herown circumstances. In particular, each potential investor should:

1.have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference in this Document and any applicable Pricing Supplement
...
4.understand thoroughly the terms of the Bonds and be familiar with the behaviour of any relevant financial markets;

Is it really credible that Dozens can say their target customers have this understanding?