Classic to ISA Transfer incorrectly reinvests repayments

I had a feeling that Mrs Aju's settings, on return from the SG transfer, had changed but sadly I did not take snapshots prior to the action. I have taken snapshots of my experience and will see what happens. 

One of the things to bear in mind, in my opinion as a result of flakey design and logic, any changes across relending/holding settings must always be checked for what you expected when completing them as its not always obvious that a change is going to be quite what you might have expected. Not saying this is the case here but in my personal experience and due to the lack of any manuals on how it all works and what to expect then its clear that some of the logic is not quite as logical as I remember when I went to night school in the 70's to learn about computers and logic etc. I'm not sure there was much Karnaugh maps or Boolean algebra involved in this area's design sadly. Probably all the logic was tacked on as an after thought with each new developer working within the bounds of the previous designs limitations too whilst not changing too much to enable speedy release. Probably not been that well tested either.  

As I wrote that paragraph it suddenly dawned on me that to keep this simple it may well be that they just turned all settings to the least obtrusive to the move to holding of Invest side and then the lending of ISA Side. They have also potentially forgotten to take a copy of the settings to restore at the end as well. Oops. Mind you that may be a very simplistic view. Thing is in Mrs Aju's case there were quite a number of loans that were moved and then just completed almost immediatly so who knows what they method they were using.

No I haven't withdrawn to holding. So far as I can tell the latest switch of reinvestment destination seems to have happened at the time of the recent transfer of my loans from Classic to ISA Classic.

Well, I've just got access to my account and I'm in the same position as Mr M. Despite the fact that my account still says "Repayments are moved to ISA Holding​", I've now got a bunch of new, non-Safeguard loans.

aju is right, you can end up with settings you didn't intend if you are not careful when changing repayment settings, but that's not what happened here - I haven't changed my repayment settings at all since 01 Dec 2017.

The situation is crystal clear from my loanbook. The date of my last new loan, prior to transferring in from Classic, was 01 December. After that, nothing until a bunch of Safeguard loans (my Classic transfer in) on 8 and 9 Feb. And then a bunch of non-Safeguard loans, with a few Safeguard loans thrown in, on 11, 12. 13, 14 and 15 Feb. When I logged in a few minutes ago, I had money in the queue, which I've obviously removed, but I've still got a couple of hundred pounds lent out that should have been sitting in my holding account ready to be withdrawn.

Reading the email Zopa sent, there is this:

What's happening with your repayments

Your ISA repayment money will be reinvested in new Core loans. Remember, these new loans will not have Safeguard coverage.

You can change your repayment settings any time.

My emphasis, obviously. But is it possible that they actually did not consider that some lenders might not be reinvesting their repayments?

Yes indeed.

I am resisting the temptation to turn reinvesting on and then off again, to make sure that it really is off, if you see what I mean. But I want to be able to say, very firmly, that those settings haven't been touched since 1 December! So I'm resisting, but I'm very torn.

Between us, Mr M and I now have almost £500 lent out in non-Safeguard loans that we didn't want. That money was earmarked for 5% Nationwide regular saving, so I am *very* hacked off, as you can imagine.

The Halifax recently messed us around. It was sorted out in 24 hours and I received £50 to cover my phone bill and £100 for my trouble and inconvenience. What are the chances of an appropriate ex gratia from Zopa do you think?   Ha ha ha.

So after I wrote that post I actually started thinking maybe I should set the alarm for some stupidly early time to check that our repayments aren't being lent out despite the "repayments to holding" setting. This is very hard - I like my sleep!

And then I remembered that I hadn't checked Mr M's account since first thing this morning, which meant that there has probably been a repayment run since. Whizzed over to his ISA account and ... yes! Just over £55 in his holding account from the latest repayment run and nothing in the lending queue.

Which makes the whole thing very odd indeed. They obviously simply ignored the account settings while the transfer was in progress and blanket relent Core repayments back into Core. Amateur indeed.

So i can't do hard sums but I can do excel - I just checked that the effective rate after 12 months and assuming each payment is made on the 1st of every month then it works out as 2.75% after a full 365 days with day 1 being first payment. It will be identical for both accounts of 3000 per year (£82.58 each). I agree its very safe though. 

You could of course check out your returned Zopa interest/capital payments money on a monthly basis and use that to pay the £250 per account. At the point you have paid N/W you could fire off a payment to a Zopa product for the outstanding amount and go through the cycle again.  This all assumes your repayments from Zopa will cover the £250 monthly - that's not that unrealistic either depending on your investment levels. Of course it's less workable if its all in the Zopa ISA account. Unless you have not used all your £1000 allowance tax wise. 

Of course that will require extra management but at least you will have money that is effective rather than £3000 languishing in C*R*A*P account waiting to be transferred into the N/W saver. Just a thought and will require more work but hey its only really once a month. I do similar to this with many current accounts with top %age rates but needing money transferred in on a monthly basis so its not hard. Doing it with Zopa in the loop is just different cog so to speak.

edit:  just re-read your note and realised it may have only been for 6 months so went back to my SS and checked for 6 whole months of said investment (£1500 each account) and the effective "6 month interest" rate is actually down to 1.44% (£21.73 each account by the end of the 6 month term assuming the same monthly lending points as above.  You could argue that this equates to 2.88% over a year I suppose so the money works slightly better for you over this period but only just.

Again this is all before tax but i do get that you want to have the money available at short notice though.