Dozens Discussion & Feedback


#631

This brings up another potential issue for me. As I understand it, people need to be aware of 4 forms of protection/guarantee across the Spend and Save sections of the app.

  1. Segregated e-money requirements (Spend section)
  2. 85K FSCS proteciton (cash in Save section)
  3. Money held in trust to remove bond market risk (bonds in Save section)
  4. 50K FSCS protection for mis-selling of investment products or Dozen’s insolvency (bonds in Save section)

This is a pretty confusing situation.

But perhaps if/when Dozens become a bank everything in Spend and Save will be covered by 85K FSCS protection and 50K FSCS Investment protection will only apply to Invest section? That would align with how banks protect their spend (current accounts), save (savings accounts), and invest (investment products) ‘sections’ and would take away a lot of confusion, in my opinion.


(Jordan) #632

The blog Dozens posted gives a pretty comprehensive summary of the 5% Bonds - https://www.dozens.com/blog/our-5-bonds-everything-you-want-to-know/

And @rob_dozens has said on the Dozens Community Forum:

They can’t label the Bonds as “guaranteed” as they are not allowed to. But the risk has been substantially mitigated by Dozens.

Another quote from Rob (on Dozens forum):

"The answer is that your money is safe! The whole point of the Trust Bond is that it is put in a trustee-controlled account along with the interest you have been promised.

This money is paid by dozens in advance, and once it is in that trust, you know you will get it back whatever happens to us."


(UncleC) #634

Thanks.

If I understand correctly, there is a reason that you cannot say it’s guaranteed, because it is NOT guaranteed.

At least, we need to know this trust account won’t be manipulated in any way.

We haven’t got more information about

  1. who control this trustee account if things go wrong?

  2. Is there a clear term in legal docs saying the money will go to users, not their investors when anything happens to the company (hopefully not)

  3. Is this account independant, in what way?

  4. Is 105% money really in the account? How many days it would take from them after receiving users money to put in the trust account?

  5. Could users (or representative) could require information about this trustee account regularly?

I think a lot more transparency is needed here for a real backstop. Essentially you know this is protection created by a startup (though it’s very innovative), but it is not by any government scheme.


(Jordan) #635

Technically a Bond is not “guaranteed” however the way in which Dozens has packaged these Bonds means that you will get a fixed 5% on them for a year.

I think some of your 5 points merge together and I don’t think I am able to answer some of them.

From what I have read - the 105% is ALREADY in the account - it won’t be put in as and when. The trustee is already set up and will sit there with the 105% already.

From the little I know - the fact it is held ON TRUST (at least I believe that is how it will be held) means that the interest will be yours no matter what (there is a legal relationship), the trustee account shouldn’t be involved in anything should anything happen to Dozens and at the end of the 12 months the “investment” will be returned.

You’re protected by the only way the Government can protect that money - the mis-selling FSCS protection - I don’t know of any protection, for the product that it is, that could protect you.


(SimonL) #636

Card received today!!!

Love all the treams signature on the back of the card box!!! Makes it feel more personal


(Splodf) #637

I think we may be missing the point somewhat.

They can’t say ‘guaranteed’ as it is classified as a bond. It would be construed as financial advice which they are not regulated or allowed to give.

They can give you all the tools to realise that it is guaranteed though.

For the first year only.


(Jordan) #638

No I agree - I did put in my previous post that its technically regarded as an investment and therefore they can’t “guarantee” anything.

Exactly, as much as it is an “investment” the product has been adapted and everything is there.


(Splodf) #639

I was building on your point not countering :wink:


(Jordan) #640

Sorry! Read it the wrong way round :rofl::rofl:

I think its a really innovative way of enticing customers and bringing about some word of mouth marketing!


#641

I think what @UncleC is saying, is that they would like hard evidence (paper trail/proof or whatever it may be), that Dozens are doing what they say they are doing.

I have little doubt it’s all OK, and I’ve been really impressed with the way they’ve gone about it.

But appreciate that some people will need more than just words at this point.


(Jordan) #642

I get that, I’m just not sure how practicable it is to provide it. It would certainly iron everything out and show off the set-up.

I think Dozens have provided probably more than is usual for a product like this so it may need some time to get things together and respond but I’m not sure.


(K Thomas) #643

If you read the terms and conditions (which are very long!) for the bond, details of the trustee and the structure are provided. The trustee account is with us bank global corporate trust services/Elavon financial services which at least going by their website seems a legitimate company separate to dozens.

Unfortunately the Ts&Cs are not available on the app any more or on their website which is a bit odd. I checked with support re this as I wanted to download a pdf but they said that it would only be available in app when a bond issue was open (in early march).

The Ts&Cs are very detailed and as long as they stick to them (which I have no reason to doubt) then it does seem that the money will be protected and held at arms length. The only slight issue of concern which stopped me from applying this month was reading the Ts&Cs about what would happen if dozens went under. If memory serves me correct it said, the trustee services company would be paid in full first for their services, then the interest would be paid and then the capital (which is why they cant say that the capital is guaranteed) So theoretically, depending on how much the service to hold all this money in trust costs, you might get slightly less than your capital back.

Having thought about all that I decided to hold off this month and have a think for a little longer particularly as the bidding structure means that larger amounts are unlikely to be successful anyway so the potential benefit of getting a small amount of interest is outweighed by the complexity of it all - you can get the same 5% interest with the TSB current account (but only for a maximum of £1500) and its much more straight forward.

Kevin


(Splodf) #644

This is my issue.

It’s a horrendously convoluted way to get a guaranteed 5% rate. I’d go as far to say it’s borderline customer unfriendly with just how convoluted and clouded the return is from a taxation perspective.

If it really is to be used as ‘just’ a marketing ploy, it could (should) just be a straight up savings account, could even limit applications for me, just like the bond does.

The bond serves nothing in the first year but to confuse people, in a bad way.

If you want to do the bonds the 2nd year fine, end the 5% offering and go down the bond route.

Just my piece.


(K Thomas) #645

Totally agree, I even suggested this on the dozens forum I think. As some one mentioned earlier, this bond is technically an investment product (with guarantees made by dozens for the first year) yet it is in the save section of the app. Why not just have a savings product? It would be a lot more simple, less hassle and much easier to understand for the lay person.

What has put me off a bit also is the bidding structure which disadvantages larger amounts. For example, I would put up with the complexity etc if I knew for sure I could add say a large regular amount a month or even a single large lump sum but you probably have to strategically put in bids for smaller amounts to be allocated to the bond.

Kevin


(NM) #646

But with larger amounts wouldn’t you just look at other bond products?


(Splodf) #647

I can only counter this by saying 5% is an almost guaranteed beat the average market level of performance, for zero risk.


(K Thomas) #648

I’m not sure what you mean - you mean through dozens or corporate bonds through a GIA? What first attracted me to dozens was the headline rate which was in effect guaranteed with capital protection (for the first year).

Now that there is further information regarding the bidding structure it just seems like quite a convoluted way for potentially not much interest. For example, if we say 1000 people out of the 3000 or so people waiting to get on the app want to bid for the bonds (a reasonable estimate I would say as most people joining up will be hooked in because of the rate or because of an interest in fintech) that is essentially £100 per person (on average) per issuance which is just £5 per year!

Kevin


(NM) #649

I mean through a different a different channel such as WiseAlpha or NSI( I currently hold bonds with the latter). I see no issue with Dozens limiting its bidding (£100) as far as I’m aware you can bid on each issuance so you can build a portfolio as I believe its meant to be a drip feeding product. This is also combined with the fact there is no penalty for early withdrawal.
As the end of the day it comes down to risk and its more the fact that this isn’t a gamble for a high interest rate as compared to a corporate bond.(Gilts are obviously a lot different).
They know they have a high value product(a basic risk free high interest rate.) In terms of user number which it seems all fintech success is based off limiting people to only £100 will raise the number of customers(rather than a few high value ones)Thereby they will be seen to be a better fintech as their user numbers will grow off the back of this.


(K Thomas) #650

Again, the reason I was attracted to dozens was both the interest rate and the capital protection - With NS&I obviously the rate is much lower and with WiseAlpha or any other corporate bonds the capital is not protected.

I don’t have a problem with dozens doing this just that it doesn’t work for me. In effect I can earn exactly the same interest with a first direct regular saver earning 5% but with a monthly limit of £300 per month.


(Splodf) #651

And likely part of your PSA allowance, thus tax free.