Updated T&Cs: effective 31 May 2017

I have triple the new minimum and was about to start increasing it, maybe to double or more. The new minimums don't really bother me, as I can see that having a lot of small accounts may be expensive to maintain.

Now I'm not so sure - particularly as that 1.5% is taken out of taxed income at 40% (in my case).

OK, I've been sitting very close on 100% invested for several months, but I had quite a lot of cash languishing in the "bank" for quite some time last year - enough that I pulled several £K out.

Given a combination of the odd default, uninvested cash (at historically seen levels) and the fees coming out of taxed income, I struggle to see how even 6.5% will be comfortably achieved.

Unless, that is, the extra 0.5% is to be used for better DD and research into loan management generally?

So, stevefindlay , is this increase to fund specific (which?) improvements for lenders, or is it deemed necessary for the longer term health of the platform generally?

I think I'll keep a close watch on actual return net after (new) fees, expected losses and cash drag over the next few weeks before deciding if I want to continue with my plan to increase - or even maintain - my holding.

Given that fees are top sliced on RS and AC, I could split cash between those two (at a mix of 5.5% and 7%) and get a similar overall return to 'new' BM - with the (perhaps dubious) protection of a provision fund, and some diversity.

Like others, i'd be happy to see a bone thrown to early adopters - even if only for a transitional one year period.

I agree that the structure is as clear as frozen butter.

It's quite clear - the new fee structure is not a cliff edge, it's incremental. So regardless of how much you have invested you pay 1.5% on the first £25K, 1.25% on the next £75K and 1.0% on the marginal investment over £100K. That's why the new net target rate for £100K, as shown in the e-mail sent by BM, is 6.7% on £100K.

Gross target rate 8.0%
Fee on £25K = £25K x 1.5% = £375
Fee on £75K = £75K x 1.25% = £937.50
Total fees £1312.50
£1312.50/£100K = 1.3125% (say, 1.3%)
Net target rate = 8.0% - 1.3% = 6.7%

This means that there's no incentive to increase your investment beyond the £25K level. The trouble is that on your first £25K the fee affects your returns by much more than 1.5% because it can't be offset against interest. As a 40% taxpayer the so-called gross target rate of 8% for me is really 5.5% after the fee, not 6.5% as BM asserts [(8% x 60% - 1.5%)/60%], and I can get 7.0% on, for example, AC's GBBA and GEIA products with the backing of a provision fund. So apart from platform diversificaton I can't see what BM is offering me now.

I don't know how fair a comparison it is, but it seemed to me that in assessing the risks of debt instruments, what BM is doing is not so very different from the manager of a corporate bond fund. I've checked out the management fees of a few of these funds, and they are nothing like 1.5%. What's more, their fees are taken before income is distributed, so it's more tax efficient. It's also worth bearing in mind that some of the platforms BM invests in themselves levy fees, and whilst these fees ARE tax deductible, in that they are taken before interest is credited to lender accounts at BM, it means that the total fees are in fact more than 1.5% - possibly even approaching those charged by active equity fund managers.

I've yet to make a final decision on what to do with my BM investment, but I'm leaning heavily in the direction of thinking that it no longer represents decent value for money.

As an impartial observer (not currently an investor) it seems to me that if the target returns aren't met (over a reasonable period - say a year) there should be some recompense.

It could be either a partial refund of fees or a credit amount which reduces any newer fees but cannot be withdrawn.

Just a suggestion. 

I must confess to being disappointed by this move, and unsurprised to see the general discontent on here.

I've been a fan of BondMason to date, and remain a fan of the model.  The main problem I have is the way that this is proposed to be introduced, that it applies retrospectively to already invested lenders, and the fact that it comes so early in the life of a platform that has, frankly, promised much but not yet delivered fully in terms of returns for lenders.  I see the headline rates, but a very small proportion of the members of this forum appear to be receiving anything like the XIRR that was forecast.  If I'd had a few months of averaging 7% (after fees) then I'd feel a bit more comfortable about giving BM the benefit of the doubt.  Also, my account remains below the minimum investment requirement, but I've been trying to increase it.  However, like others, I'm reluctant to deposit more money while my invested amount remains below 90%.  I'd previously stated an intention to drip-feed money into my account each time it reaches 95% investment, but at the current rate I'm not sure I'll get there by July.

The clincher for me is the significant increase in fees.  If BM was able to structure those fees in the way that the likes of Funding Circle has then the pain of the increase would be somewhat alleviated.  I'd ask stevefindlay to look again at this, to see whether everything possible has been done.

I pressed both buttons to withdraw uninvested cash and to liquidate my portfolio. The response was an email congratulating me as I was now fully invested!