Cleo £85,000 Security Pledge

OceanSound

Cleo website is saying that they match our bank in security by offering a £85,000 Security Pledge:

£85k tells you that we’ll match your bank in security. But we’ll beat them on everything else.

However, this pledge wouldn't cover our Cleo savings if they were to go under (which is what the FSCS guarantee would cover - if Cleo was part of the FSCS).

On the FAQ they've listed what is not covered:

Losing your bank or credit card
Online purchases
Sharing your details with other parties

A bit sneaky that they've made the pledge to match the FSCS scheme amount. i.e. £85,000, but then failed to mention that savings won't be covered in the unlikely event that they go in to administration.

Reed_Richards

Worse than sneaky, I would say.

HappyHarry

Cleo is just a Registered Account Information Service Provider, which looks at your bank accounts and transactions. This means that Cleo does not hold client money, and can not transact on client accounts.

From Cleo's FAQs:
"Cleo is a read-only service so no-one can ever move money in or out of your account."

Cleo doesn't offer any savings accounts (at time of writing). In fact, Cleo certainly doesn't hold FCA permissions necessary to hold client money.

Why would Cleo need an £85,000 security pledge to protect funds that they can't hold? Why do they mention savings with them at all?

OceanSound

HappyHarry wrote: »

...
Cleo doesn't offer any savings accounts (at time of writing). In fact, Cleo certainly doesn't hold FCA permissions necessary to hold client money.

Why would Cleo need an £85,000 security pledge to protect funds that they can't hold?....

that's pure crafty.

We won't keep your money. We'll work with MangoPay and ask them to stick the money in a Barclays account (which is 'ringfenced' - fat lot of good that will do if we go under).

So really we are not keeping your money, Barclays is. Also, because our Cleo Wallet doesn't pay interest it's not strictly a 'savings' account (not by definition of the FCA - which requires a 'savings' account to be an account which pays interest)

I wonder what cleo want's us to call this Wallet account?..if it's not a savings account, perhaps it's a 'putting money aside account'?

BTW, in the cleo FAQ you will find this:

The wallet is *not* a savings account, in that your wallet balance doesn't accrue interest and is not FSCS guaranteed.

I really think they push the £85,000 security pledge more in their promotional materiel than the above statement.

eskbanker

OceanSound wrote: »

I wonder what cleo want's us to call this Wallet account?..if it's not a savings account, perhaps it's a 'putting money aside account'?

Personally, I'd call it a solution looking for a problem....

quirkydeptless

OceanSound wrote: »

I wonder what cleo want's us to call this Wallet account?..if it's not a savings account, perhaps it's a 'putting money aside account'?

A Cleo purse account?

OceanSound

quirkydeptless wrote: »

A Cleo purse account?

Let us look after your purse... account?

OceanSound

OceanSound wrote: »

.....
We won't keep your money. We'll work with MangoPay and ask them to stick the money in a Barclays account (which is 'ringfenced' - fat lot of good that will do if we go under)....

Actually, the last part may not be correct. My understanding now is that, if Cleo goes under, then the funds are protected because it's held in a Barclays account. However, if Barclays goes under then the funds are not covered under the FSCS (does anyone know why? - even though the funds were deposited by Cleo/Mangopay, presumably it is held under your name in a Barclays account, so how come no FSCS guarantee?)

These fintech's and media will tell us 'don't worry, if fintech goes bust, your funds are safe because it's ring-fenced with Barclays'. But is this actually true?

I mean, what happens if Cleo has many debts that need to be paid, would the money held at Barclays be legally protected?. i.e. a Court wouldn't be able to pay Cleo debt's using our funds held at Barclays?

Shouldn't Cleo spell out exactly what happens in the unlikely event that things go pear shaped. I beleive this is a requirement under FCA rules for P2P lending.

Ratesetter (which is P2p) on their website specifies what happens.

It is extremely unlikely that RateSetter will go into administration but we of course have to plan for all contingencies. If RateSetter were to fail (or close to new business for whatever reason), we have a fully funded plan in place to ensure that our lenders' loans are repaid according to the schedule.....

Maybe this is not a requirement for the likes of Cleo, which is not P2P? How come the rules are not consistent across the board?