We've re-branded the Provision Fund the 100% Fund....

You mean that isn't Kev shown in the posting above?

Money, this is a great picture, made me laugh. If you ever need a job, I'm sure we could kick out one of our resident graphic marketing boys....

Kevin 

"I don't have to sell my soul, he already in me"

Is the claim of 100% protection intended to be a joke or a serious financial promotion?

If it is not a joke, please say:

1. Has RateSetter discussed this apparent promotion with the FCA's misleading financial promotions team yet? What did they say about the claim of 100% protection? I don't think it's possible for any UK investment business to accurately make a claim of 100% protection without FSCS protection.
2. Have the trustees of the Fund agreed to this financial promotion and the claims it appears to make?
3. Do RateSetter or the trustees of the Fund agree that there are circumstances in which debt collection activities can leave the Fund unable to make lenders 100% whole, for example in the case of war or widespread civil disorder?
4. Has RateSetter's CEO received a letter from the OFT or FCA asking
whether RateSetter has ever breached the Consumer Credit Act? If yes,
did the CEO identify any breaches? Breaches would include things like errors in pre-contract disclosures to consumers, errors in calculations or errors in annual statements to consumer borrowers.
5. How 100% lender protection would be provided for the following simultaneous combination of events:

a. An error in annual statements that requires all interest paid by consumer borrowers to be refunded. Plenty of examples of this around.
b. A losing legal decision that leaves liabilities sufficient to cause RateSetter to become insolvent and unable to top up the fund.
c. Loan losses that exceed the amount of money in the fund, perhaps due to recession, war or a dispute that leaves loans to those in a newly independent country unenforceable. So that after a resolution event the fund cannot make investors 100% whole even if it is assigned all future income.
d. Fraud by Fund officials that further depletes the fund. Consider, for example, the case of a senior fraud-related officer at a major UK bank who abused their position to steal money from their employer.
e. Abuse of position by a broad team of risk control and underwriting team members, which happened a few years ago at one of the independent UK lenders to consumers, the team doing it to hit lending targets but inflating the risk profile of the loan book as a result.

I can conceive of insurance policies that might cover at least some of those risks, but are those policies in place with sufficiently large limits and providing protection even in cases of negligence or criminality by employees of RateSetter or professional firms that advise it?

Please relax over the weekend. I'm not going to do anything more than discuss this for at least a couple of weeks and right or wrong the RateSetter team deserves time off.

I wouldn't have thought it would be necessary for all five of the events to occur simultaneously.  I'd think that any one of those events had the potential to cause a very serious problem and possibly make it difficult for the Provision Fund to keep lenders whole.

Yes, that's why I asked about resolution events and what the fund trustees think about this. They also have responsibility to the lenders to ensure that claims for the fund's capability are accurate, not just RS itself. I don't know whether the trustees were consulted or are sufficiently different in composition from RS senior management, though. If they are sufficiently independent they should probably be having a quiet word with RS about the claim not being something that the fund can really deliver in sufficiently dire circumstances and that a less extreme claim than perfection would be better.

If they are anything like the product management and marketing people I deal with at work they are really capable people. Not perfect, but then, nobody is.

Right, but it's helpful to combine a lot of bad things that can happen to help to illustrate that 100% just isn't achievable. 99%? Maybe. But 100% is going to be read by consumers as no chance of loss and there's always that chance in sufficiently unfortunate combinations of nasty circumstances. RateSetter is clearly a good or great team with a really well thought out product but even they have limits on how safe they can make things.

This promotion reminded me of a society that made a 100% claim with no FSCS and wrote all about how good its internal processes were and how they provided better protection than the FSCS. The FSA ordered the firm to return all money invested as a result of the promotion.

James,
Thank you letting us have Easter off, very much appreciated. And I'll be sure to raise your points with the Marketing team and the fund trustees in due course.