Update on Dozens' fixed-interest bonds and protection

Good morning! Always nice to hear from a Dozens Fan

So, your maths is correct, but rather misses the bigger picture.

You are drawing your conclusion from a single issuance in a single month. Firstly, this was the first, small and very highly oversubscribed, issuance. The £200 figure may turn out to be true across future issuances, we will see, but since there are currently £1m of bonds available, the median in October may well be higher.

Secondly, this is the first of a series of issuances. It is not about a one-off investment of £200. If you take part each month, even assuming the number stays consistent, that’s £2,400 earning 5% - i.e. £120.

The reality is that a very substantial number of UK consumers, particularly younger ones, have NO SAVINGS AT ALL (in 2018 50%+ of all 20-25yo have £0-£2000 total savings).

Even if individuals manage to scrape together anything at all, they are not rewarded for saving it instead of spending it. Yes, inflation will eat into the 5%, but that is also true in any other circumstances. If you keep it as cash, in a current account or even most Cash ISAs, you will end up with less than you started with. It is this crazy scenario that encourages more and more spending today, and reduces your ability to cope in future.

If you were able to put away just £200 a month (which is quite a lot for most of us), and were sure it was going to be worth more than it is now in 12 months, AND you could be sure to get access to it at any time, is that not a good thing?

Now, if you already have a lump sum, you have other options available to you in the market. Dozens is also working on providing you with other options for helping you to invest this for your future, so you can then choose the most appropriate option for you and your risk levels.

I wonder what alternatives you might suggest that would “show respect to all their customers”? For the avoidance of any doubt, we are not a bank and we cannot pay interest on deposits. If you have any other ideas, we would definitely be happy to hear them.

Finally, there’s no need to get involved with the Dozens Fixed-Interest Bonds if you consider this to be not worth your time, of course. You can still enjoy the features such as the built-in budgeting tool and the fee-free travel transactions, and we will be announcing more details of the Invest tool that is currently open for browsing only.

Thanks for raising these interesting issues.

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I actually like the idea of bonds for encouraging saving, I actually think the minimum should be bought down to £50 though. £50 a month is easier to obtain than £100 for a lot of people. I put money in my ISA, my Stocks ISA and so on each month, it might be £50 in one, £50 in another, £50 in savings etc, its soon ads up. The fact with the Dozens bonds you are getting interest, will encourage people to save while earning a bit of month.

If I was investing a lump sum, there are many options, but I wouldn’t see Dozens as a big lump sum scheme, more as a regular savings scheme with a decent rate of interest.

People always want different, but those that can afford more, need to remember Dozens isn’t about just helping the rich, its about encouraging savings, and using money wisely. And the bonds with 5% interest a £100 minimum can help those that previously don’t save, consider a decent option, for a few button clicks.

I also think, as well as reducing the minimum to £50, there should be an auto bid option each month, so you set how much you wanna bid each month.

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@daedal, what an amazing thought:slight_smile: I really enjoyed reading it.
100% agreed with all the points you mentioned here .
@robert, it would be a good idea to include these points like reducing bid amount to £50 and auto bid to Dozens roadmap.

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Thanks @daedal - thoughtful and insightful as usual!

I do appreciate your point about £50 being more achievable, but there is a balance to be struck between accessibility and the practical considerations for bond listings and costs.

Yes, £50 would be easier, but then so would £20, or £10. We must remember that this is not a deposit product, it is a bond. There does need to be a value, and when we create the listing, we establish the value of the individual ‘bond’ that is sold. It is currently set at £100 and can’t be changed for the current series*.

Edit: … or at all in fact. I believe that all bonds are sold with a ‘par’ value of £100

This is already a very low price hurdle for the kind of product that is being sold (with the protections we’ve put in place, the interest rate, and the ability to withdraw at any time), so we feel it is already a good offer.

As for the auto-bidding, I will raise that and get back to you but it is already a very low-effort investment process (a matter of a few clicks, as you say) and there are some other products coming to this section which might change the choices people make, so we should get feedback on those first.

Love this, and do agree. The good news is that if you do have more of a lump sum to invest, and are looking at the longer term, then we will shortly have some very exciting news.

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Invest seems to have gone live!

Nothing at the low risk end though :pensive:

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Not yet! We have the current Fixed Interest bonds, and there will be some other options in Grow for cash savings, and we will be adding to the list of investments at all levels from now on :slight_smile:

Just waiting for iOS to update their app store before we say too much more … but watching with interest

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iOS

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Bid successful :heavy_check_mark:

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Watching Glintpay going into Administration due to a legal technicality has shown how all organisations are vulnerable even if they are completely solvent.

My understanding the Dozens current accounts are protected using FCA regulated " safeguarded " rules similar to GlintPay just before they went into Administration and clients are still waiting for their money back.

Under the FCA rules there is no clear guidance on how the money should be re-distributed, what can be taken out from the safeguarded accounts by administrators to cover legal expenses and how long the administrators of the liquidated company can hang onto the money.

The latest updates from the GlintPay administrators:

“If it is not possible to rescue the Companies or sell the business and it ceases to trade, the Administrators would seek directions from the Court on the process of redistributing the Customer Funds to customers. This process could take several months. Also, the EMRs require that the costs of distributing the safeguarded funds to be deducted from the safeguarded funds. However, it is uncertain which specific costs are included within this and what their value may be. One matter for the Court to decide would be what costs could be taken from the Customer Funds to pay for the costs of distribution. Depending on the nature and therefore the quantum of costs allowed, a shortfall to Customers could arise after deducting the cost of distribution”

Also point out the Administrators legal fees could also be taken out of the so called safe guarded account and wait for over 4 months.

What is important for Dozens, there is a clear backup process in place just in case in the very rare event of Administration as the issues that have arrived with GlintPay needs to be avoided at all costs.

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Hello, first time posting here.

Just wondered, this month I didn’t get an email sharing the breakdown of allocation from last months bonds issue.

I also didn’t get an email notifying that the December allocation was open for bidding and no in app notification as normal either.

Was this just me or is this the same for others? Was there no email or app alert or is there a glitch?

Thanks

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Welcome @KingBob! Thanks for joining us here

We do not want to bombard customers with emails, so we are not going to send individual emails about every issuance, and each breakdown, because not all customers are necessarily interested in any given issuance.

It is a hard balance - keeping people informed without annoying everyone else. We are looking to create a new in-app notification tool to keep you updated without filling up your email inbox.

To answer your questions:

We shared the breakdown from the last issuance on social channels, and here:
The Dozens Bonds are Back!

The plan is for there to be an issuance of the Fixed Interest bonds each month, so there is no need for an email unless that schedule changes. You should be able to see the bonds in the app as soon as they go live on the 1st of each month (or the first working day thereafter). Because the bidding process prioritises the value of the bid over the timing of the bid, in general it is not a matter of “getting in early” and you will normally have several weeks in order to put your bid in.

For your information, the details of the current issuance are:

Do let me know if you need anything else

@jgw2001 Sorry for taking a little while to get back to you on this

I’m really no expert on the specifics of Glint - you will need to contact them for details as I only know what I happen to have read.

As an FCA regulated investment business (as well as e-money institution), Dozens has additional obligations to other firms that only have e-money licences. One of these key obligations is that we are required to have a full wind-down plan that we have already presented to the FCA.

This plan looks at how the business would be wound down in the event that Dozens were not able to continue to operate (for financial reasons or otherwise) - the key to this plan is that an “orderly wind-down” is required such that all customers receive back all of their money, before the firm is declared insolvent. The business is required to have sufficient funds in store (regulatory capital) such that an orderly wind-down is achievable, and Dozens would have to start wind-down well in advance of running out of money. This concept of a wind-down was introduced for banks and investment firms post the 2008 financial crisis, but is not yet a requirement for e-money firms.

This is one of the ways that our unique model, with two separate FCA licences, offers something pretty unique to the UK consumer.

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Glintpay seems unique in how the administrators are handling it, when Loot went into Administration there was none of the delays that are happening with Glintpay, over the years a number of financial companies have gone into administration, and its not taken months. The administrators here seem to be taking a different course to what is normal. You wind down a company, the holding bank releases the funds, as Administration is a legal process, its never been normal to get a specific judgement to release the funds, as they are technically assets of the company which the Administrators will have got permission to deal with under the actual Administration order normally.

Dozens, isn’t stupid, they have clearly gone through the whole process of safeguarding, in order to get an investment licence as well.

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As far as I can see, it’s the nature of the assets (gold) that’s proving problematic. Dozens is on far more familiar ground, so I don’t think there’s much to compare

Yes most likely, and those assets not held in the UK, which was always my issue with Glintpay from the start which I mentioned elsewhere before.

“The issuance will be 2/12/19 (as the 1st is a Sunday) and will be for £100,000 with £25k prioritised for Seedrs investors”.

Last round was for £1 million.

It’s very disappointing to see that this issuance will only be for £75k (for non-Seeders investors). Therefore the allocations customers are likely to get will be low.

After having waited most of 2019 for these bonds to relaunch, it’s a pity the December bond will be for only 10% of the last issuance.

Dozens said these bonds were for PR and they’re certainly milking that for the least outlay possible.

The issuances are now available on a regular basis, and that’s how we would like it to continue. As you say, last month’s issuance was for £1 million, and every bid that we received was accepted, so there is certainly plenty being made available.

The bond programme that we have put in place has a finite amount available - which is £7m. We would like to make sure that this is used effectively over a longer period to ensure that as many of our customers can benefit on a regular basis as possible, bearing in mind that the number of customers is growing all the time. We want this to be good for customers, for Dozens and our shareholders.

We have to try to determine, therefore, what amount to make available in any given month, and as yet we do not know what the demand will be. We are still only on the fourth issuance, so we will need a bit more time to understand how the demand will change.

For example, November and December may not be the time most people are wanting to put money away since there are a lot of expenses to prepare for. And last month’s issuance was so large that many may already have put lump sums away and only have smaller amounts available. We will see!

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How much you looking to stick away that has generated such disappointment?

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Hi Robert,

The FCA are making a statement with regards to the issue of “mini bonds” today. This is part of the fallout from the London Capital & Finance collapse.

It would be good to get a response from Dozens regarding the statement, on this forum, as I believe your bonds comply with the FCA requirements - from what I’ve heard on the radio thus far.

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Dozens are not unlisted speculative bonds, so not subject the the FCA ruling, they are NEX exchange listed bonds.

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