IFISAcava
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Post by IFISAcava on Apr 9, 2021 15:32:17 GMT
So it's a de facto interest rate cut when you want to take money out - which is what an "access" account is all about. Withdrawal fees and access really don't go together. I don't think that's fair or accurate. In "normal conditions", should they ever apply again, this fee won't be payable. You put your money up for withdrawal and out it comes, no fee. In conditions of reduced liquidity, you pay a fee if you want to stuff up the queue with withdrawal requests that you know aren't coming any time soon. And in those circumstances only an idiot would put the whole amount of their funds up for withdrawal - you'd put it up in small chunks, as payments are made, which would massively reduce your exposure to the fee. There have been plenty of complaints on this board of AC not having fully thought through how these accounts might function in difficult times, and this is an attempt to work something out. If there isn't enough liquidity to make everyone happy, how exactly are they going to keep the lights on? You certainly don't want, as is the case now, lenders to be motivated to put their whole AA funds up for withdrawal whether they actually want them out or not. Will they be disclosing the size of the queue and your position in it? And the past speed of redemption? Would be pretty frustrating if not.
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jlend
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Post by jlend on Apr 9, 2021 15:59:35 GMT
It doesn't feel equitable that 100% of the fee is falling to access account holders.
We are told the purpose of the fee is to help our agent AC during non normal conditions.
But 100% of the fee is falling on the access accounts.
Manual accounts are providing zero extra fees to support the agent.
Unless I am mistaken?
I also question whether the AC shareholders should be asked to fund the platform during non normal conditions. This has been very common during covid with companies. I am not convinced it is equitable to ask access account holders to fund 100% of the fee.
Just my personal thoughts. Of course we can simply exit the accounts if we think the fees are not equitable or too high etc.
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ceejay
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Post by ceejay on Apr 9, 2021 16:20:54 GMT
It doesn't feel equitable that 100% of the fee is falling to access account holders. We are told the purpose of the fee is to help our agent AC during non normal conditions. But 100% of the fee is falling on the access accounts. Manual accounts are providing zero extra fees to support the agent. Unless I am mistaken? I also question whether the AC shareholders should be asked to fund the platform during non normal conditions. This has been very common during covid with companies. I am not convinced it is equitable to ask access account holders to fund 100% of the fee. Just my personal thoughts. Of course we can simply exit the accounts if we think the fees are not equitable or too high etc. I think the main issue is that they haven't been entirely straight about the purpose of the fee, but then again I'm not sure that they could have been. Yes, there is a comment about helping them in difficult conditions, and to an extent I'm sure that's true, but the structuring of this fee has been done very deliberately so that it is targeted at the amounts that AA holders have in the withdrawal queue, so as to disincentivise stuffing up the queue with speculative or precautionary withdrawals. This has much more to do with trying to find a way to keep the AAs going in difficult times than it does with paying a fee to AC. Alternatively: in difficult times, either way there needs to be a fee to keep AC going. Over the last few months it's been paid by everyone: if this happens again then the fee will be targeted at funds in the withdrawal queue. Remember also that you can also sidestep the fee entirely by accepting whatever discount is available on the SM at the time (0.1% at the moment, which has been described here as an entirely reasonable fee to exit).
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Post by gmumford on Apr 9, 2021 16:24:14 GMT
There’s too much information to absorb in one sitting but if I have read it right it does make some sense. They stopped new lending because of a big withdrawal queue in the access accounts, without new lending they can’t make their money so they either need to stop that happening again or have a fee which props them up while they can’t lend. I’m not saying it’s great just that it makes some kind of sense.
The good thing is that it only applies in abnormal conditions and it can be avoided unlike the old fee.
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jlend
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Post by jlend on Apr 9, 2021 16:28:33 GMT
It doesn't feel equitable that 100% of the fee is falling to access account holders. We are told the purpose of the fee is to help our agent AC during non normal conditions. But 100% of the fee is falling on the access accounts. Manual accounts are providing zero extra fees to support the agent. Unless I am mistaken? I also question whether the AC shareholders should be asked to fund the platform during non normal conditions. This has been very common during covid with companies. I am not convinced it is equitable to ask access account holders to fund 100% of the fee. Just my personal thoughts. Of course we can simply exit the accounts if we think the fees are not equitable or too high etc. I think the main issue is that they haven't been entirely straight about the purpose of the fee, but then again I'm not sure that they could have been. Yes, there is a comment about helping them in difficult conditions, and to an extent I'm sure that's true, but the structuring of this fee has been done very deliberately so that it is targeted at the amounts that AA holders have in the withdrawal queue, so as to disincentivise stuffing up the queue with speculative or precautionary withdrawals. This has much more to do with trying to find a way to keep the AAs going in difficult times than it does with paying a fee to AC. Alternatively: in difficult times, either way there needs to be a fee to keep AC going. Over the last few months it's been paid by everyone: if this happens again then the fee will be targeted at funds in the withdrawal queue. Remember also that you can also sidestep the fee entirely by accepting whatever discount is available on the SM at the time (0.1% at the moment, which has been described here as an entirely reasonable fee to exit). That may be correct but that it not what AC have said. Of course AC are free to do what they like and the SM discount is low as long as too many people don't try and exit at the same time which may yet occur again. I would personally prefer a more equitable fee if it is needed for the reasons AC have said. If the fee is needed for another reason then I would expect AC to say that as a regulated company. It is not great if they are misleading lenders, I don't know if they are or not.
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dave4
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Cynical is a hobby not a lifestyle
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Post by dave4 on Apr 9, 2021 16:33:34 GMT
Question...s AA secondary market, dose it go when we are in normal times  ,dose the sm stay gone forever?, and this new fee a replacement for when we are in abnormal times. Question, who / what dictates normal and not normal ?. Query. the sm as is doesn't benefit AC financially, the fee will.if i read correct? |
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rscal
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Post by rscal on Apr 9, 2021 16:47:47 GMT
They haven't precisely said when the fee is coming, but I would assume from June 1st? (or May 1st?) to tie in with the formal end of the temporary fee.
(Plaice your bets)
As it happens I have been doing exactly what some have suggested of late: put in bulky withdrawals and finding that large amounts were now coming out regularly, opting to cancel and re-instate a withdrawal after making fresh deposit. But we can scarcely be blamed for responding in that way.
['Gaming' indeed!]
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ceejay
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Post by ceejay on Apr 9, 2021 16:57:50 GMT
They haven't precisely said when the fee is coming, but I would assume from June 1st? (or May 1st?) to tie in with the formal end of the temporary fee.
(Plaice your bets)
As it happens I have been doing exactly what some have suggested of late: put in bulky withdrawals and finding that large amounts were now coming out regularly, opting to cancel and re-instate a withdrawal after making fresh deposit. But we can scarcely be blamed for responding in that way.
['Gaming' indeed!]
"From the 1st May, we are introducing a Withdrawal Fee that will apply to both Access Accounts and Exit Account investors but only when we are outside of Normal Market Conditions..." [No slur intended with the use of "gaming". I've been doing it myself, bigtime, because the conditions require it!]
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alender
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Post by alender on Apr 9, 2021 17:41:28 GMT
This will be another interesting change when it hits the FOM and FCA, some extracts of the FCA guidance for Fairness of variation terms in UK financial services consumer contracts
whether the consumer understands the consequences of a future variation at the time the contract is concluded; whether the customer will have "freedom to exit", contractually and practically; and whether the term "strikes a fair balance between the legitimate interests of the firm and the legitimate interests of the consumer".
This like all changes that AC have made will take time to work their way through the FOM/FCA back log but will be dealt with at some point. When the contract was concluded for me there were 2 sources of funds to repay investors, capital repayments and new money with no withdraw fee. These look like quite a change to the T&Cs I signed up for.
I think AC could well have been forced/persuaded by FCA that they needed to release more of the lender funds, as it is not long (at current payout rates) when lenders who want out will be out so AC had to devise a new way to lock in the funds, ever since the start of the lock in AC have been very reluctant to pay money due to lenders when it is available.
This seems a pointless/self destructive action, as we can see the lenders who want out will be out very soon at the current repayment rate if no changes are made and new investors are joining. As Stuart states there is so much money wanting to come into the AAs AC may have to restrict investment so what is the point. The one thing that is certain is that if Stuart wishes to restrict future investment into the AAs he has found an ideal solution. It would not surprise me if we now see a reduction in repayments due to investors not willing to put money in as they will be charged to take it out as according to AC we are not in normal market conditions and these will now have gone further away with the result of these changes.
This looks like something out of the EU for complexity and anyone who has the cheek to want to leave must be punished.
The lender fee is dead, long live the withdrawal fee.
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sl75
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Post by sl75 on Apr 9, 2021 18:31:53 GMT
This seems like I'll be paying more in fees than I do today on their reducing lender fee. Don't they also need to give at least 30 days notice of this change? My understanding is that for changes to the 90DAA they need to provide 90 days' notice.
In practical terms, I think it'll be moot by the time it's activated for THIS period of "non-normal" conditions...
The real effect of this is that it'll make it much harder for AC to manage the withdrawal demand in any future periods, as most of it will be "invisible" to them, ready to turn into actual queued withdrawals the moment that the "visible" portion of the queue disappears or becomes tolerably low.
If I've understood correctly, there'll also be two effective levels of fee - the plain 1% annual rate for those who just demand a large withdrawal and let it sit there, and a much lower effective fee for those who actively manage a series of withdrawal requests, only allowing an amount that they expect to be actually withdrawn within the next couple of days or so to actually sit in the withdrawal queue...
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IFISAcava
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Post by IFISAcava on Apr 9, 2021 18:35:21 GMT
This seems like I'll be paying more in fees than I do today on their reducing lender fee. Don't they also need to give at least 30 days notice of this change? My understanding is that for changes to the 90DAA they need to provide 90 days' notice.
In practical terms, I think it'll be moot by the time it's activated for THIS period of "non-normal" conditions...
The real effect of this is that it'll make it much harder for AC to manage the withdrawal demand in any future periods, as most of it will be "invisible" to them, ready to turn into actual queued withdrawals the moment that the "visible" portion of the queue disappears or becomes tolerably low.
If I've understood correctly, there'll also be two effective levels of fee - the plain 1% annual rate for those who just demand a large withdrawal and let it sit there, and a much lower effective fee for those who actively manage a series of withdrawal requests, only allowing an amount that they expect to be actually withdrawn within the next couple of days or so to actually sit in the withdrawal queue... assuming withdrawals are still proportional to total sum invested rather than to withdrawal amount requested.
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alender
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Post by alender on Apr 9, 2021 19:41:07 GMT
I believe the 90DAA was because if the rules change then the lender must have an option to exit but now this will be 90 days plus the time to clear the exit queue which is something AC are ignoring.
From what I understand if you wish maximise you interest you only request an amount you expect to be paid each day, fairly easy for the QAA but for 30D and 90D accounts, you will be trying to guess what the situation will be when you reach the end of the 30 or 90 days in the future.
To maximise withdrawals and interest you will need to place a withdrawal request on each of the accounts 7 days a week. Given the interest rate difference is so small between the accounts who will want to invest in the 90D account when you will take a large hit on the interest rate if you incorrectly guess the situation in 90 days time. This can only add more volatility to the accounts.
However if you wish to game the system (no matter what states AC declare the accounts are in as this could change before the end of the notice period) for the 90D account the best strategy for those who may wish to get there money out at some point (and who wants to place money in an access account and have no access) would be to place 1/90 of the account for withdrawal each day (it will earn full interest during the 90 day period) and if at the end of the period if you decide you do not want to withdraw or the exit queue is too large and you are already in the queue cancel the withdrawal request.
These accounts were meant to be a simple investment, we will have accounts in one of three states and depending on the state of liquidity and a complicated exit route if you do not want to lose too much interest. One thing is certain is that you will need to be a sophisticated investor to understand these accounts.
AC should be trying to win over investors confidence not making complicated changes to somehow change investors behaviour.
Can't wait for the next idea to come out of AC, these accounts rules and how to game the accounts could be a specialist subject for mastermind
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ptr120
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Post by ptr120 on Apr 9, 2021 20:20:51 GMT
I cant help but think that some kind of bonus / incentive (remember when they used to do those?) to invest a certain amount of new money for a certain period of time (and / or cancel queue positions, and not make new ones) would have been a better way of disincentivising people from taking a queue position for the sake of taking a queue position. The way this has been implemented looks like profit making.
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mogish
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Post by mogish on Apr 9, 2021 21:46:04 GMT
I'm a simple soul. I want to invest in something where I know what I'm getting and the notice period to withdraw. Maybe I'm missing something but would it not be easier just to switch to Loanpad or similar and save the hassle?
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dead-money
Rocket to the Moon
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Post by dead-money on Apr 9, 2021 22:51:07 GMT
I'm a simple soul. I want to invest in something where I know what I'm getting and the notice period to withdraw. Maybe I'm missing something but would it not be easier just to switch to Loanpad or similar and save the hassle? Indeed, doing just that, although of course once LoanPad is overfunded, they'll have to close their doors or reduce rates, same problem AC is hoping to have before 1st May 
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,dose the sm stay gone forever?, and this new fee a replacement for when we are in abnormal times.
