Everything you wanted to know about: the dozens 5% bonds


#22

Ni Nick

No worries. Happy to help, whatever the location

We don’t use the word “guaranteed” as we are not allowed to, I’m sure you understand. However, we have done a LOT to mitigate the risk to you by offering the trust programme alongside the other protections and the work we have done to negotiate the bonds in the first place.

That trust, where we put a matching amount for each issuance, will be in place for the first £1m of bonds. That could be sold in 2 months or across 1 year, depending on demand, but you will know what we are offering whenever you decide to buy.

At the moment we are selling you bonds that have fixed 5% interest and run for 12 months. This agreement is for this investment and doesn’t change.

Assuming these are still on offer in September, then you could buy this amount again and THOSE bonds would start their own 12 month cycle and would have their own fixed interest no matter what you do with the first purchase. Each purchase is separate.

At the end of 12 months the bond matures and that money goes back into your savings account and you then choose what you want to do with it depending on the options available at the time. Your outstanding bonds are not affected.

Does that explain it?


#23

Perfect - Thanks!

Once the first million is up, and the 5% rate is no longer there in the form of the “trust programme”, will you be offering those same bonds (that you said typically yield a 7-9% return in the article above), but with no trust programme to coincide with it (so the customer takes on the risk that it may decrease in value?)

I haven’t seen any info about the future offerings (after this initial 5% “product”) - Although I may be jumping the gun somewhat! :smiley:


#24

We’re working on all sort of ideas for what comes next, but launching with a clear product first, then as we get more customers and more history, we can get the variety that will suit different people.


#25

Hi @robert, really interesting reading the blog post. Some inferences and questions that I had:

  1. If I have understood this correctly, are there are likely to be 10 issuances of £100K to reach the £1 million set aside?

  2. Essentially having read the blog post, what you seem to be offering is in effect a hedged emerging markets corporate bond fund. Just marketed differently. Would you agree with that assessment? If you do agree with this, would you not consider this asset class the highest risk bond class?

  3. Given this, I think the most important thing for me is the oversight of the trustee controlled account which in effect is the back stop against any capital loss. Are the board of trustees going to be independent of Project Imagine and run at an arms length so that in the (hopefully unlikey) case of Project Imagine going bankrupt the administrators would not have access to this to pay to creditors? I think transparency here is really important.

  4. It seems to me that the 5% bond is a “mini-bond” product - i.e. the money that I put in is a loan to you which you then take and lend on wards. Is that correct?

  5. I also think you should be much clearer. Although Project Imagine/Dozens is regulated by the FCA, is the bond a regulated product? Reading between the lines, if it is a “mini-bond” I think not.

  6. As I’m sure you are aware, regulated bond products have to prepare detailed statements and prospectuses which mini-bonds do not (they are essentially a black box which investors have to take on trust). I think it is very important to show that you are going to provide at least the same level of transparency i.e. will you be detailing exactly what the bond will be investing in?

I do think the thinking behind it is laudable but I fear that a lot of people on here are essentially thinking that this is similar to a 5% savings product with similar risk but I think the risk is much higher. Will I buy any bonds? If I am satisfied regarding the trustee account, probably, because in effect dozens is taking the capital risk and not me. However, once that is taken away I don’t see what the advantage of the dozens bond would be over a regulated emerging markets corporate bond fund although I would be happy to be convinced otherwise.

Thanks
Kevin


#26

Have you taken this blog post down? It’s 404ing for me :frowning:


#27

temporarily, yes I’m afraid. It is being updated with the clarifications from our most recent conversations - it was obvious that it was still not yet “EVERYTHING” you wanted to know and so we are updating it.

I hope it will be back up this evening with even more clarity between what are SAVE products and what are INVESTments.


#28

Sounds good.

(Playing devil’s advocate, I do worry a bit about transparency and that you could be accused of having something to hide. But as long as you acknowledge that it’s been updated then all should be well!)

:dozens:


#29

Having watched the video #AskAC I understand why the blog has been taken down to be re-written as two separate products are being conflated on there.


#30

Can you clarify if them being “separate” (meaning you can sell all the bonds from one purchase while keeping all the bonds from other purchases) applies in all cases? Or only if each purchase was from a different “train”?

So if I make 2 purchases on the same day (and they ended up coming from the same train), and then wanted to sell, would I have to sell everything from both purchases?

If I’m deliberately trying to split up my purchases so I can sell them individually without affecting the others, is that something you’ll officially support? Eg. by making it clear what “train” a purchase right now would come from, and what train your past purchases came from? How about notifications when a new train pulls up to the station?


#31

Yes, purchases on the same day will be from the same issuance (train) and not be separated so you’d have to sell the full amount

yes, but they would have to be in different months (or if we issue bonds more frequently in future, maybe weeks). You can’t currently have separate purchases from the same month’s offer

Each separate issuance will be listed in the app - which are currently available and which ones you have purchased, so you can track each individually

I am not sure about the exact alerting system that will be in place, but that is a good idea. Maybe you should at least be able to register your interest in receiving these alerts.


#32

The updated version of the blog post about 5% fixed interest bonds is now published.

Saving for the many

In response to your feedback, and also from early interest we have received from investment contacts, you will see that there is an interesting new priority feature to the Trust Bond.

We have taken on board (not intended as a train pun, but I’ll claim it) your feedback on various topics here and elsewhere, and the excitement around the interest rate has been even more than we could have hoped for. In response, we’ve decided to prioritise the smaller saver as our mission is to bring opportunities to these new savers.

The intention is to give as many people as possible a chance to take part in the savings, and for us to keep offering the trust structure so you know your money is safe.

There’s more detail in the blog post, and also more explanation on the investment alternatives.

I look forward to hearing your thoughts on this approach


#33

In all honesty I’ve been trying to figure out how to get into the bond market for ages… Can’t wait for the launch. Plus I’ve mentioned this to family and i think friends will come soon after just need an invite code


#34

Very well thought out update, which I’m sure will make the bonds far clearer to those who haven’t watched the AskAC podcast. As well as some nice bonus details of the sections of the app.

Interesting new approach in regards to how the 5% bonds are being issued. It certainly seems fair to be rewarding the smaller savers more, especially as the larger ones will soon have access to the investment area.

Although I do hope the new change is explained well in the app, as it is now a little more complex then the previous way of just keep selling them until you run out of that issuance.


#35

Great blog.

I honestly think I’m more excited about this than any other FinTech in memory.

FreeTrade comes close, but with the volatility of the markets, and the guaranteed first year return, Dozens is looking delicious! :grinning:


#36

Loving the ‘bid’ system, absolutely cements the notion of making saving accessible, not just for the big fish. Is this likely to reviewed in future if trains leave the station with empty seats?


#37

Regarding the trust bonds, will it be possible to save funds into a S&S ISA account in one issuance, and save into a general investment account in the next? Can we hold and invest into both your ISA and general investment accounts concurrently?

Will interest applicable to trust bonds in general investment accounts be paid net or gross of tax?


#38

Still need to take a look. So, if I put £100 in bonds, and dozens goes down, am I absolutely guaranteed that money for the first year? Is there anywhere it says this on the site?

That Reddit thread points out some interesting things, such as:

The FSCS limit for investments is £50,000. It also does not cover investment loss

and

So basically its not a risk-free 5% - you’re still exposed to the credit risk of the ultimate issuer of the 8/9% bonds which Dozens then effectively back-to-backs to retail customers (while taking the 3/4% margin).

Yes, if they go bust due to poor management (as most startups do), your bonds are worthless and no protection applies.

While generous, the way I read this is that “you are not protected from default outside of the £1m backing we provide”. Also note that the FSCS only applies to " our misselling or default ". If the company you lend to via one of their bonds defaults, then I don’t believe FSCS protects you.

So if I invest £100 and the company goes down, will I lose it all?

Thanks


#39

Sorry “Confused of Dorset” here. If not that, what does the FSCS cover then please? R-


#40

Doing a little more digging and looking at Companies House.

https://beta.companieshouse.gov.uk/company/11153882/filing-history

It says here that the company is valued at £187 - source

Split into 1 million shares. Can someone go into what this means?

Thanks! :slight_smile:

Just a note, I’m not trying to bash dozens in any way shape or form. Just researching for the post so that I can correctly inform readers. Thanks :smiley:


#41

There are a few misunderstandings in that thread, so I do recommend you refer to the blog post linked a couple of times in this topic above.

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.

These were the clarifications we made in the blog post after reading topics on Reddit, MSE and elsewhere where we realised people were getting confused.

Regarding FSCS, there are two kinds of protections so people get confused (this is from the FSCS site):

  1. If you have money in savings with a UK-regulated bank or building society, the FSCS deposit guarantee scheme offers protection for up to £85,000; this applies per person, per institution.

  2. If you’ve got a risk-based investment, and the investment firm goes under, a different FSCS protection applies. 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.

In the case of 1, dozens is not a bank, so it does not apply, but your cash in the current account is an emoney account, so it is already kept safe and protected.

When you move money into a dozens savings account, we (currently) hold these client savings accounts at Bank of Scotland, so they are protected by the BoS / Lloyds Banking Group FSCS protection, not ours. Once we have our own banking licence, this will change.

In our case, we do have a licence for investments and therefore you are protected in the second instance - for bad advice and default, but not the risk associated with the investment itself, up to £50k