Green Energy Income Account - a couple of basic questions

Yes you add £100 and the system will invest across the various green loans that meet the basic criteria (first charge security, 71% or better LTV, etc.).  As repayments are made and new loans become available you will automatically invest in those.  Should you wish to withdraw funds then you can adjust your investment target and the system will try and sell loan units in order to release those funds, subject to there being a buyer, or will divert repayments as they occur.  There are currently no fees for reducing your investment in this way.

As others have said the Manual Loan Investment Account is not protected by a provision fund.  You can invest manually and manage your own portfolio, choosing which loans you invest in, managing your risks, etc. and for that effort you will receive a higher return.  But you also run the risk of late payments, extended recovery periods, and even capital losses - which whilst expected to be small are not going to remain zero forever - as well as having to invest your own time to do all of the above.  The provision fund and Green Energy Investment Account are designed to provide protection from that but comes at a cost of giving you a lower return.  You still have all the other benefits of lending, such as the asset security, but have that extra layer of the provision fund on top.

There's no right or wrong approach that applies equally to all lenders and it will be up to each to find the balance that works for them.  I expect most of our existing lenders to either ignore the green account or to only invest a small percentage of their portfolio.  However there are many who won't have lent with us because of the risks and / or work of reading all the credit reports who will find the account attractive.

@dllive, I agree with the posts by sl75 and chris, to which I would add:

Most individual lenders cannot use capital losses, but are taxed in full on interest received. Hence it is more tax-efficient to lend where there is a provision fund to absorb the losses, especially if you are a higher rate taxpayer, see here: p2pindependentforum.com/post/29457/thread.

The provision fund is not guaranteed to cover losses and there is a risk that it may not, especially if a large loan defaults or there is an event (such as a retrospective reduction in FITs, which I think is extremely unlikely) which causes widespread defaults across the sector. The provision fund is permitted to use credit insurance, which might allow it to mitigate these risks, but AC does not (at present) disclose what, if any, insurance is held.

I have nothing against provision funds in principle, and I have significant amounts invested in RS. However, without more information on insurance I will be steering clear of this account for now.

I think the 7% is rather explicitly targeted at the kind of investor who is comfortable investing in RateSetter, with its proven Provision Fund, but sees AC as a step too far down the road of risk. Such investors can get at most 5.9% currently on RS (and only with constant reinvestment), so the AC fund is an attractive proposition, albeit slightly riskier simply because the AC Provision Fund is new and has a small amount of seed money in it (in absolute terms). For three-year investors on RS, the AC fund looks extremely attractive rate-wise.

I shall certainly be considering this for funds I am giving to my daughter, a non-taxpayer (but over 18). These funds need a very high level of safety but need to beat the rate of interest being charged by the Student Loan Company for the annual £9K fee (full interest of RPI + 3% is charged for the first four years, while she is studying). A substantial part of the accrued funds I have given her so far are currently in RS, but for this specific purpose, the AC fund looks attractive (and of course the funds need to remain diversified, so I will not seek to disinvest from RS, merely divert funds that would otherwise have gone there). In fact I'm only waiting for the algorithm that shares out the investments within the fund to be corrected, as I understand it is currently not correctly observing the 20% of total investment limit for any one borrower. In the meantime I'm suggesting to my daughter that she open an AC account.

Before anyone asks why she doesn't simply make repayments to the SLC with funds as I send them to her... Because we have no idea when, after graduation, she will commence employment or begin to earn above the threshold for interest to accrue (only RPI is charged from graduation until that point). Or whether it will be better to use accrued funds towards a house deposit. My crystal ball is broken, unfortunately.

Has anyone come across any adverts for the GEIA?

Just did a search for the exact phrase

"GREEN ENERGY INCOME ACCOUNT"

Google says,
About 77 results (0.58 seconds)

Just tried the .xls from my GEIA report, and my figures match the screen exactly

I have had 50 quid awaiting investment all day, but I think I saw a messgae from Chris saying he was working on a fix ...