Provision Fund paying out today

It has been just over three years since we introduced our first provision fund protected accounts back in late 2014, the Green Energy Investment Account (GEA) and the Great British Business Account (GBBA).

We look constantly for ways to improve our offering, our service and the information that we provide to our lenders. We receive a steady flow of questions and comments regarding our provision funds so we have this week updated our provision fund web page to improve both clarity and detail in terms of how the funds work and what lenders should expect from them. We hope that you find this helpful.

Separately, but on a related note, we have now identified and corrected a software problem which was preventing the payment of late/missed interest from the provision funds of the GBBA, GBBA2, GEA and the PSA accounts (but not the other accounts with provision fund protection, which were unaffected by this issue). We have now coded and deployed a fix which eliminates the problem going forwards and allows the relevant provision fund to cover late/missed interest payments in future.

A sweep is also under way to identify instances where a late/interest payment has not been covered as a result of this problem so that a correction can be applied. This process has begun already and is automatic – lenders need take no action as we are already dealing with this on your behalf. Lenders affected by this issue will see a corrective payment shortly which should remedy the position for them. Please note that not all lenders will be affected, only those in the GBBA or GEA and only those with holdings in specific loans where there were late/missed interest payments.

We would like to take this opportunity to thank the lenders who made us aware of the problem and apologise to those who were affected by it. The software update is a permanent fix and the problem should not reoccur.

Encountering a technical issue like this is not something that we are happy with as a business and we are making a payment of £1000 to Young Money (link), part of the Young Enterprise charity, in recognition that we could have done better. This is a fantastic charity and we would certainly encourage you to take a look at it as it focuses on bringing financial education into the classroom to help create a far more financially literate next-generation, something that we feel very strongly about as a company.

We would like to thank you for your support and look forward to continuing to provide you with a healthy return on your money.

Kind regards

PF will cover capital losses if the security, when sold and when other available realisation avenues have been exhausted, does not cover the loan balance remaining. It doesn't cover the capital whilst the loan is suspended. It also covers payment delays/shortfalls of interest from a borrower where that sum arrives later than expected. Updated version on website explains PF function quite clearly www.assetzcapital.co.uk/invest/faqs?utm_source=Assetz+Capital+Members&utm_campaign=423f929475-EMAIL_CAMPAIGN_2017_02_21&utm_medium=email&utm_term=0_f8d8dd0f0d-423f929475-116755177#help-document-84

I'm stuck with the same four I** and few others in GEA and GBBA.  However, I don't think AC is making "a cheap gesture" or "pocketing" our returns or anything of the kind.  E-mail sent today explains the situation and addresses lenders concerns about PF and late interest payments.

 

No one knows how much money there is in the AC PF because AC won't tell us. I suspect it's probably not as much as we would like. The majority of lenders in the GBBA and GEIA who are sitting on defaulted/suspended (hair splitting in most cases) loans are now likely to want quick recompense from the PF of the principal amount lent, whether this recompense comes combined with interest repayments, or as a lump sum at the end of the term. This recompense will have to come from either the PF or from the sale of the held security. It's in AC's best interest to pay the invested capital on defaults back to lenders via the PF as soon as possible in order to maintain goodwill. This will act to focus the minds of AC on immediately declaring defaults and selling the security in order to replenish the PF. AC will no longer be able to keep kicking the can.

Now, the only reasons for not introducing immediate repayments of capital from the PF will be either regulatory, or because the PF doesn't have enough moolah in it to cover AC's increasingly nasty amounts of bad debt.

But the problem is, until you sell the security, you don't know how much bad debt you have. As I understand it, the PF has three times the expected rate of bad debt.

I'm stuck with an annoyingly large four figures in the GEIA, which i mainly had for warm fuzzy feeling purposes, but I know I will get it (capital) back eventually.  I'm glad interest payments are now being honoured prior to any formal default (at which point I would expect repossession/capital recovery efforts).  And it has taught me not to use these accounts and to stick with a much better diversified MLIA where i am my own discretionary provision fund. 

Well I am now even more baffled. I have spent hours discussing and complaining with AC that my return is nowhere near 7% - not slightly below 7%, but massively below 7%. Ben insisted twice that much of the shortfall below 7% was simply because of late payments.

I have 5 figures invested in GBBA and GEA. I received the payments yesterday from the provision fund.  £4.13 and £3.26 !!  That represents about 0.01% of my holding!  The PF payments yesterday come absolutely nowhere near making up the shortfall about which I have been complaining for some months.

What on earth's going on here?

I am not sure anyone on the forum will be able to answer your question. Perhaps an email or telephone call to AC might provide you with an answer?

Thanks applets, but I've spent hours preparing for, calculating for, double-checking for, waiting for, then taking part in conversations and IMes with AC. But they just don't seem to get it. I was repeatedly told that some of my shortfall is because of "suspended" loans (not "defaulted" loans, or "bad debts", but "suspended"), and much was simply because of late payments. So I was expecting this PF payout / bug fixing to at least compensate for the latter. But no.