Curious

[TedM]

I'm a curious sort of guy and with the launch of the Green Deal there were a few questions that popped in to my head about the finance side of things. So I asked the Green Deal Finance Company the following:

Can you confirm the financing options available to Green Deal Providers.

1: Are they obliged to use finance from GDFC or can they use alternate sources of funds?
2: If they use GDFC are they obliged to charge the 6.96% interest rate (plus fees) or can they charge a different (higher) rate?
3: If they obtain finance from elsewhere then what interest rate are they allowed to charge?
4: What sections of the GD legislation covers these aspects of the GD?

This is the reply:

Thank you very much for your email. Due to the commercially sensitive nature of TGDFC’s pricing arrangements we are unable to give exact details until GDPs are part of our on-boarding process and have signed non-disclosure agreements. Our website publishes all of the information that is available to those outside of this on-boarding process (including TGDFC’s indicative interest rates).

Please note that in order to begin the process of registering for finance through TGDFC, GDPs must be accredited with DECC.

As a first port of call for information around the Green Deal I would recommend visiting the following website - http://www.decc.gov.uk/en/content/cms/tackling/green_deal/green_deal.aspx.

I hope that this is useful.


So what exactly is it that they have to hide? Surely all this should be transparent?

If the timing works out I may be having a meeting with Greg Barker at some stage over the next couple of weeks, so will see what he has to say about it.

 

[infinity]

I thought you asked a pretty straight forward question that the answer should be readily available. Maybe they don't know themselves..

 

[confounded]

So what exactly is it that they have to hide? Surely all this should be transparent?

If the timing works out I may be having a meeting with Greg Barker at some stage over the next couple of weeks, so will see what he has to say about it.

High rates and lack of transparency will kill the green deal.

A terrible time to launch an expensive financing initiative while a debt super cycle is unwinding, if people think they are being ripped off they wont touch it, offer finance at 1% (UK 5 year gilts are 1% which is the hypothetical cost of borrowing for the UK government) and they stand a fighting chance. With Supper market banks offering 5.2% for home improvements loans I just don't know what they are up to.

0% financing is what they should have kicked this off with then use increases in the rates every 1/4 to drive demand.

 

[TedM]

I've now got a sensible reply from a more senior person at the Green Deal Finance Co:

1. GDPs can access finance from sources other than The Green Deal Finance Company
2. They are currently obliged to use TGDFC's rate plus fees
3. That depends on the alternative finance source they access
4. Please ask DECC

So it seems to me that if a GDP gets funding from other than the GDFC they can charge whatever interest rate and fees they like.

 

[SRE]

Martin Lewis's Moneysavingexpert site is refusing to review the Green Deal until the interest rates are confirmed (polite chitchat for transparent I suspect!) given that moneysaving expert is the 5th most trusted brand in the UK, that spells real problems for Green Deal. I assume that they have changed their stance from promising on the 28th that they would provide a full review in this week's email to when the interest rates are confirmed because they have been asking the same questions as Ted!

Or maybe Ted is Martin Lewis

Paul Lewis is on Moneybox this afternoon on Radio 4 @ 1.30 about energy savings, bills and Green Deal BBC Radio 4 - Money Box Live, Energy saving and bills

 

[TedM]

The question I didn't ask (because I thought there was no chance that they would answer it) is - What is the interest rate that the GDFC charges GDPs? Is this less than the 6.96% (plus fees) that the consumer pays?

Of course someone who is a GDP (cough) can't answer this because they have signed (cough) a non-disclosure agreement. :wink5:

 

[confounded]

The question I didn't ask (because I thought there was no chance that they would answer it) is - What is the interest rate that the GDFC charges GDPs? Is this less than the 6.96% (plus fees) that the consumer pays?

Of course someone who is a GDP (cough) can't answer this because they have signed (cough) a non-disclosure agreement. :wink5:

It is largely irrelevant this scheme will not survive in the current form. Anyone with any sense will not touch it, anyone without any sense (politicians or most of the UK population) will be filling miss selling claims in 5 years time.

We had a customer yesterday who wanted me to include opportunity loss in their break even analysis, at a modest 3% rate on £7k it worked out over £200 wiping out any of the self consumption benefits of a 4kWp system. It pushed the breakeven from 7 to 9 years which is still acceptable. At 7% it would take all the consumption benefit and half the feed in tariff...

Financing at these sums can not be recouped by energy savings, this is turning into another profit making exercise for the banks.

 

[finchy]

Sadly yet another complete shambles! No one in the media has taken this serious not one positive head line, if it has it was based on very poor lose assumptions. In theory lots on things sound good ! Still working on my jet powered boots...which is linked to my solar back pack !! Going off to my shed now !

 

[Eco Deal]

GDP's dont make there money on the finance they add a pertcentage to the amount financed basicly !

then the TGDFC finance that amount minus ECO funds if ECO apply's!!!!

 

[SRE]

How is it going ECO/MEP You been busy?

 

[TedM]

The point I'm making, Michael, is that GDP's are free to get finance from anywhere they are able. They are not restricted to the GDFC.

If they get finance elsewhere at, say, 5% they can still 'sell' this as a loan to a GD customer at 7.5 to 9.5% - so there is plenty of opportunity there for a GDP to make a profit from this.

 

[Gavin A]

The point I'm making, Michael, is that GDP's are free to get finance from anywhere they are able. They are not restricted to the GDFC.

If they get finance elsewhere at, say, 5% they can still 'sell' this as a loan to a GD customer at 7.5 to 9.5% - so there is plenty of opportunity there for a GDP to make a profit from this.

but can this then still be repaid via the electricity bills?

 

[TedM]

Sure, it is just a normal GD loan.

 

[Gavin A]

Sure, it is just a normal GD loan.

is it not the GDFC that actually sorts out the arrangements for repayment via the customers electricity bills though?

I suppose it might be possible for other finance companies to set up this route in competition with GDFC, but it doesn't look to me as if it's the sort of thing that individual green deal providers could sort out just by making alternative financing arrangements.

Unless GDFC is also set up to process repayments due to 3rd party financing organisations.

I'm basically thinking that this looks a bit like the REAL situation, where in theory you could sign up with another organisation, but in practice that other organisation doesn't exist and the barriers to them existing are too great for this situation to be likely to change.

 

[Gavin A]

also, why the hell have GDFC got a picture of solar panels being installed to illustrate their 'how the green deal works' page?



and why is the installer using silver clips on black framed panels? shoddy.