Unity Mutual LISA

Tugboat

Has anyone had any experience with the Unity Mutual LISA? With a guaranteed 1.5% return has anyone considered using this now every Cash LISA has now been cut?  I am currently with Moneybox and had two interest rate cuts so looking to see what else is available to transfer my 3 years of savings.

masonic

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

Albermarle

If you wanted to transfer to a Stocks and Shares LISA , then there are ones with better known companies  eg
https://www.youinvest.co.uk/lifetime-isa
Of course it means more risk than a cash LISA but probably better returns if you intend to hold the LISA long term.

TheTrotsky

masonic said:

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

I suggest that you read the the key information document (regular or single payment) at the bottom of the aforesaid webage. They specifically state on page 1 that the interest rate is guaranteed and set for each tax year. In practise, this means the interest rate is set at the start of each tax year and, although they don't advise the interest for 2020/21 in the document (it refers to the interest rate being 1.5% for 2019/20), both my son & daughter received an email at the commecement 2020/21 to advise that the interest rate would be retained at 1.5% for 2020/21. In any event, if in doubt, the current interest rate can be confirmed with them prior to any application. They also confirm on page 2 that the product is indeed covered by the FSCS (I've also personally checked on the FCA Register).

The only peculiarity is that it's not a bank account but an insurance product which qualifies to be held in a LISA. In practise, this means that Unity Mutual takes all of the investment risk and most of the potential reward (or loss) and, in return, pays you a guaranteed rate of interest (regardless of how the underlying insurance product performs). It is indeed certainly unusual but that does not mean that it's a "dodgy product" as you seem to be intimating in your last sentence. It should also be born in mind that Unity Mutual is a trading name of The Independent Order of Oddfellows Manchester Unity Friendly Society Limited which was founded in 1810 (hardly a "fly by night outfit").

I'm not here to promote Unity Mutual. I'm here to have an informed discussion of Unity Mutual's merits and demerits and to determine whether MSE have any serious misgivings about the product that would cause them not to list it amongst their best buys or at least mention it with appropriate caveats. There aren't many, if any, directly comparable LISAs but it is, nevertheless, an eligible product. My only complaint with Unity Mutual thus far is that they are a bit tardy in issuing their annual statements.

Perhaps you'll retract your barge poll now :-)

TheTrotsky

I forgot to mention the FSCS logo at the bottom of their webpage

masonic

TheTrotsky said:

masonic said:

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

I suggest that you read the the key information document (regular or single payment) at the bottom of the aforesaid webage. They specifically state on page 1 that the interest rate is guaranteed and set for each tax year. In practise, this means the interest rate is set at the start of each tax year and, although they don't advise the interest for 2020/21 in the document (it refers to the interest rate being 1.5% for 2019/20), both my son & daughter received an email at the commecement 2020/21 to advise that the interest rate would be retained at 1.5% for 2020/21. In any event, if in doubt, the current interest rate can be confirmed with them prior to any application. They also confirm on page 2 that the product is indeed covered by the FSCS (I've also personally checked on the FCA Register).

The key information document does make it clear that there is FSCS protection for capital only as an insurance product, so thanks for finding that in the documents. It also confirms that accrued interest is not protected by the FSCS and in an unfavourable scenario (not even a 'stress' scenario') the return on your investment would be zero (see the Performance Scenarios table). They may state elsewhere that there is a guaranteed return, but both cannot be true.

It's important to realise that the FCA register does not confirm whether any product is covered by the FSCS. It can only indicate the firm qualifies for FSCS cover, the firm may offer some products that qualify and some that do not.

TheTrotsky said:

The only peculiarity is that it's not a bank account but an insurance product which qualifies to be held in a LISA. In practise, this means that Unity Mutual takes all of the investment risk and most of the potential reward (or loss) and, in return, pays you a guaranteed rate of interest (regardless of how the underlying insurance product performs). It is indeed certainly unusual but that does not mean that it's a "dodgy product" as you seem to be intimating in your last sentence. It should also be born in mind that Unity Mutual is a trading name of The Independent Order of Oddfellows Manchester Unity Friendly Society Limited which was founded in 1810 (hardly a "fly by night outfit").

Friendly Societies are well known for creating high cost, low quality products and pushing them out to hapless investors, often employing networks of "introducers" who get a kickback from anyone they can lure in. If you wish to get into bed with these Oddfellows, then feel free, but don't be under any illusion that you will definitely receive interest on the money you pay in. I hope that you do, but you cannot ignore the literature stating you may not.

TheTrotsky said:

I'm not here to promote Unity Mutual. I'm here to have an informed discussion of Unity Mutual's merits and demerits and to determine whether MSE have any serious misgivings about the product that would cause them not to list it amongst their best buys or at least mention it with appropriate caveats. There aren't many, if any, directly comparable LISAs but it is, nevertheless, an eligible product. My only complaint with Unity Mutual thus far is that they are a bit tardy in issuing their annual statements.

Perhaps you'll retract your barge poll now :-)

I didn't suspect you were here to promote this Friendly Society, only to ask for others opinions of it, which I have kindly volunteered. I won't be retracting my barge pole because a 1.5% return does not provide anywhere near adequate compensation for the risk of making a 0% return on the investment.

grumiofoundation

TheTrotsky said:

masonic said:

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

I suggest that you read the the key information document (regular or single payment) at the bottom of the aforesaid webage. They specifically state on page 1 that the interest rate is guaranteed and set for each tax year. In practise, this means the interest rate is set at the start of each tax year and, although they don't advise the interest for 2020/21 in the document (it refers to the interest rate being 1.5% for 2019/20), both my son & daughter received an email at the commecement 2020/21 to advise that the interest rate would be retained at 1.5% for 2020/21. In any event, if in doubt, the current interest rate can be confirmed with them prior to any application. They also confirm on page 2 that the product is indeed covered by the FSCS (I've also personally checked on the FCA Register).

The only peculiarity is that it's not a bank account but an insurance product which qualifies to be held in a LISA. In practise, this means that Unity Mutual takes all of the investment risk and most of the potential reward (or loss) and, in return, pays you a guaranteed rate of interest (regardless of how the underlying insurance product performs). It is indeed certainly unusual but that does not mean that it's a "dodgy product" as you seem to be intimating in your last sentence. It should also be born in mind that Unity Mutual is a trading name of The Independent Order of Oddfellows Manchester Unity Friendly Society Limited which was founded in 1810 (hardly a "fly by night outfit"). 

I'm not here to promote Unity Mutual. I'm here to have an informed discussion of Unity Mutual's merits and demerits and to determine whether MSE have any serious misgivings about the product that would cause them not to list it amongst their best buys or at least mention it with appropriate caveats. There aren't many, if any, directly comparable LISAs but it is, nevertheless, an eligible product. My only complaint with Unity Mutual thus far is that they are a bit tardy in issuing their annual statements.

Perhaps you'll retract your barge poll now :-)

75 88% (edit - as of 20th June) of your posts have been about Unity Mutual LISA...

For the sake of an extra 0.5% interest I am quite happy to use my barge pole too and stick with a cash LISA where there is no risk of the underlying investments underperforming. 


MSE reported on it when it was introduced with resultant forum discussion. 

https://www.moneysavingexpert.com/news/2018/11/unity-mutual-launches-new-lifetime-isa/
https://forums.moneysavingexpert.com/discussion/5920966/unity-mutual-launches-new-type-of-lifetime-isa-mse-news#post75019176

TheTrotsky

Tugboat said:

Has anyone had any experience with the Unity Mutual LISA? With a guaranteed 1.5% return has anyone considered using this now every Cash LISA has now been cut?  I am currently with Moneybox and had two interest rate cuts so looking to see what else is available to transfer my 3 years of savings.

My son and daughter both have Unity Mutual LISAs. I can't deny that I haven't been a bit concerned by the lack of a mention on MSE given it's current "marketing leading" interest rate.

It doesn't operate like a bank account; you can't log in and see what's happening day to day (interest is supposed to accrue daily). You can however get a daily indicative snap shot by entering your account details at https://www.unitymutual.co.uk/customer-centre/my-policy-value/ (you are given a current balance figure, including accrued interst ,which I guess you could print if you were so inclined) and are issued with an annual paper statement (my kids 2019/20 statements arrived in mid-May).

The paper statement presentation could definitely be improved and it's a bit annoying that the interest for any given tax year is actually paid in on the first day of the following tax year (so you have to wait for the 2020/21 statement to see what interest has been earned for 2019/20; the statements don't disclose the interest to be paid). As such, the indicative snap shot figure given online doesn't tally with the paper statements (because the former includes accrued interest whilst the latter only includes paid interest).

Personally, I've always found them very helpful on the phone and the phone has always been answered promptly. I definitely get the impression that the LISA operation is only a relatively small part of their operations (they are part of Oddfellows Manchester Unity Friendly Society which was founded in 1810) and that their back office functions and online offering could definitely do with some additional investment. Perhaps a computer or two! Then again, I've always got the same impression whenever I've seen client's private banking statements; more 19th Century than 21st Century! At least Unity Mutual type their statements rather than write them with ink and quill! A small mercy :-)

TheTrotsky

masonic said:

TheTrotsky said:

masonic said:

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

I suggest that you read the the key information document (regular or single payment) at the bottom of the aforesaid webage. They specifically state on page 1 that the interest rate is guaranteed and set for each tax year. In practise, this means the interest rate is set at the start of each tax year and, although they don't advise the interest for 2020/21 in the document (it refers to the interest rate being 1.5% for 2019/20), both my son & daughter received an email at the commecement 2020/21 to advise that the interest rate would be retained at 1.5% for 2020/21. In any event, if in doubt, the current interest rate can be confirmed with them prior to any application. They also confirm on page 2 that the product is indeed covered by the FSCS (I've also personally checked on the FCA Register).

The key information document does make it clear that there is FSCS protection for capital only as an insurance product, so thanks for finding that in the documents. It also confirms that accrued interest is not protected by the FSCS and in an unfavourable scenario (not even a 'stress' scenario') the return on your investment would be zero (see the Performance Scenarios table). They may state elsewhere that there is a guaranteed return, but both cannot be true.

It's important to realise that the FCA register does not confirm whether any product is covered by the FSCS. It can only indicate the firm qualifies for FSCS cover, the firm may offer some products that qualify and some that do not.

TheTrotsky said:

The only peculiarity is that it's not a bank account but an insurance product which qualifies to be held in a LISA. In practise, this means that Unity Mutual takes all of the investment risk and most of the potential reward (or loss) and, in return, pays you a guaranteed rate of interest (regardless of how the underlying insurance product performs). It is indeed certainly unusual but that does not mean that it's a "dodgy product" as you seem to be intimating in your last sentence. It should also be born in mind that Unity Mutual is a trading name of The Independent Order of Oddfellows Manchester Unity Friendly Society Limited which was founded in 1810 (hardly a "fly by night outfit").

Friendly Societies are well known for creating high cost, low quality products and pushing them out to hapless investors, often employing networks of "introducers" who get a kickback from anyone they can lure in. If you wish to get into bed with these Oddfellows, then feel free, but don't be under any illusion that you will definitely receive interest on the money you pay in. I hope that you do, but you cannot ignore the literature stating you may not.

TheTrotsky said:

I'm not here to promote Unity Mutual. I'm here to have an informed discussion of Unity Mutual's merits and demerits and to determine whether MSE have any serious misgivings about the product that would cause them not to list it amongst their best buys or at least mention it with appropriate caveats. There aren't many, if any, directly comparable LISAs but it is, nevertheless, an eligible product. My only complaint with Unity Mutual thus far is that they are a bit tardy in issuing their annual statements.

Perhaps you'll retract your barge poll now :-)

I didn't suspect you were here to promote this Friendly Society, only to ask for others opinions of it, which I have kindly volunteered. I won't be retracting my barge pole because a 1.5% return does not provide anywhere near adequate compensation for the risk of making a 0% return on the investment.

My point about the FCA was simply that I'd checked to confirm that Unity Mutual was on the register. As regards the product, Unity Mutual clearly states in its Key Information Document that the product is covered by the FSCS. I've done as much as I can to confirm that the product is covered. At the end of the day its caveat emptor, as always, because the FCA is not, in my opinion, fit for purpose. For example, apparently some of these mini-bond promoters have been promoting themselves online and in promotional material as being regulated by the FCA and covered by the FSCS (for years in some instances) without any sanction by the FCA and don't get me going on the FCA's oversight of peer-to-peer investors (the FCA have allowed some of them to carry on trading when they knew they weren't even ring-fencing client monies). In my opiion, Andrew Bailey should have been sacked but instead he was made Governor of the BofE! So I'd be very concerned.

I take your point about the accrued interest. Obviously once interest is paid it becomes part of your capital and the interest for 2019-20 has now been paid (just not advised on the latest paper statemnt). So, in principle, only the accrued interest for the current tax year should be "at risk". Looking at the terms and conditions it does talk about interest being "earned" on a daily basis (Clause 9) which led me to believe that interest would be credited daily, not accrued. This misunderstaning only became apparent when the paper statements arrived.

I would however point out that the same interest risk applies to any FSCS protected bank account where interest isn't being credited to your account on a daily basis; so in, in principle, the same interest risk applies to the interest paid by, for example, Nottingham BS which pays interest annually (it may well just be the case that Nottigham BS doesnt't choose to highlight this risk in its documents).

Obviously, you may consider Nottingham BS a better credit risk than Unity Mutual/Oddfellowes but that's a different discussion.

TheTrotsky

grumiofoundation said:

TheTrotsky said:

masonic said:

If you mean this one: https://www.unitymutual.co.uk/savings-for-you/lifetime-isa/

If you’re looking to buy your first home, then Unity Mutual’s Stocks and Shares Lifetime ISA may be the one for you.

Our LISA is similar to a cash LISA... 

In their T&Cs (https://www.unitymutual.co.uk/media/1492/um-lifetime-isa-tcs-031019.pdf) 

We are not liable for any loss caused through a fall in value of Account investments.

There is no mention of FSCS protection, and no explanation for what "100% capital protection" means in practice and who stands behind this protection. I see no evidence they claim the 1.5% return is guaranteed like you state, in fact the rate appears to be variable and can be change with 14 days notice.

And to top it off it is offered by a Friendly Society. I wouldn't touch a product like this with a barge pole.

I suggest that you read the the key information document (regular or single payment) at the bottom of the aforesaid webage. They specifically state on page 1 that the interest rate is guaranteed and set for each tax year. In practise, this means the interest rate is set at the start of each tax year and, although they don't advise the interest for 2020/21 in the document (it refers to the interest rate being 1.5% for 2019/20), both my son & daughter received an email at the commecement 2020/21 to advise that the interest rate would be retained at 1.5% for 2020/21. In any event, if in doubt, the current interest rate can be confirmed with them prior to any application. They also confirm on page 2 that the product is indeed covered by the FSCS (I've also personally checked on the FCA Register).

The only peculiarity is that it's not a bank account but an insurance product which qualifies to be held in a LISA. In practise, this means that Unity Mutual takes all of the investment risk and most of the potential reward (or loss) and, in return, pays you a guaranteed rate of interest (regardless of how the underlying insurance product performs). It is indeed certainly unusual but that does not mean that it's a "dodgy product" as you seem to be intimating in your last sentence. It should also be born in mind that Unity Mutual is a trading name of The Independent Order of Oddfellows Manchester Unity Friendly Society Limited which was founded in 1810 (hardly a "fly by night outfit"). 

I'm not here to promote Unity Mutual. I'm here to have an informed discussion of Unity Mutual's merits and demerits and to determine whether MSE have any serious misgivings about the product that would cause them not to list it amongst their best buys or at least mention it with appropriate caveats. There aren't many, if any, directly comparable LISAs but it is, nevertheless, an eligible product. My only complaint with Unity Mutual thus far is that they are a bit tardy in issuing their annual statements.

Perhaps you'll retract your barge poll now :-)

75 88% (edit - as of 20th June) of your posts have been about Unity Mutual LISA...

For the sake of an extra 0.5% interest I am quite happy to use my barge pole too and stick with a cash LISA where there is no risk of the underlying investments underperforming. 


MSE reported on it when it was introduced with resultant forum discussion. 

https://www.moneysavingexpert.com/news/2018/11/unity-mutual-launches-new-lifetime-isa/
https://forums.moneysavingexpert.com/discussion/5920966/unity-mutual-launches-new-type-of-lifetime-isa-mse-news#post75019176

I'd say closer to 100% :-)

As I've said in a previous post, I have tried to approach MSE by email on at least two occasions in the past without response. I'd read about the Unity Mutual LISA in newspaper articles (I think the Telegraph was one) and was surprised that MSE wasn't mentioning it in its list of best buys, given that it was offering (marginally) the best rate on the market.

I don't ususally follow the MSE discussion threads that closely so thanks for highlighting those threads.

masonic

TheTrotsky said:

My point about the FCA was simply that I'd checked to confirm that Unity Mutual was on the register. As regards the product, Unity Mutual clearly states in its Key Information Document that the product is covered by the FSCS. I've done as much as I can to confirm that the product is covered. At the end of the day its caveat emptor, as always, because the FCA is not, in my opinion, fit for purpose. For example, apparently some of these mini-bond promoters have been promoting themselves online and in promotional material as being regulated by the FCA and covered by the FSCS (for years in some instances) without any sanction by the FCA and don't get me going on the FCA's oversight of peer-to-peer investors (the FCA have allowed some of them to carry on trading when they knew they weren't even ring-fencing client monies). In my opiion, Andrew Bailey should have been sacked but instead he was made Governor of the BofE! So I'd be very concerned.

Yes, it is good that you confirmed they are on the FCA register, many do not, and I share your misgivings about the FCA and its register, and also about Andrew Bailey failing upwards.

TheTrotsky said:

I take your point about the accrued interest. Obviously once interest is paid it becomes part of your capital and the interest for 2019-20 has now been paid (just not advised on the latest paper statemnt). So, in principle, only the accrued interest for the current tax year should be "at risk". Looking at the terms and conditions it does talk about interest being "earned" on a daily basis (Clause 9) which led me to believe that interest would be credited daily, not accrued. This misunderstaning only became apparent when the paper statements arrived.

I think there is still a lack of clarity here. This is the performance scenarios table:

The 0% return over 1 year could be explained by UM becoming insolvent within the first year (although I'd call that more than 'Unfavourable' or even 'Stress').

However, reflecting on this further, the 0% return over 3 and 5 years cannot be explained assuming a 1.50% pa return in the first year. This must be paid for the policy to exist in year 2. UM could declare 0% interest for future years and still remain within its obligations, but I'd assume the first years interest, when paid, cannot be taken away again.

So either the table is wrong, or there are mechanisms by which this interest can either not be paid, or be clawed back. One explanation is FSCS compensation that only covers premiums paid for the insurance product and not any interest (either paid or accrued). I'm no expert on the FSCS compensation for insurance products, it will differ from the FSCS compensation for bank savings, so perhaps this is possible. I would suggest it is necessary to have a very good understanding of what happens in practice in the 'Unfavourable' and 'Stress' scenarios above (and how they could arise) before considering an investment in this product.

TheTrotsky said:

I would however point out that the same interest risk applies to any FSCS protected bank account where interest isn't being credited to your account on a daily basis; so in, in principle, the same interest risk applies to the interest paid by, for example, Nottingham BS which pays interest annually (it may well just be the case that Nottigham BS doesnt't choose to highlight this risk in its documents).

Obviously, you may consider Nottingham BS a better credit risk than Unity Mutual/Oddfellowes but that's a different discussion.

Accrued interest on deposit accounts is covered by the FSCS protection for savings up to the date the firm fails (or shortly thereafter), or for fixed term accounts until the end of the fixed term. I was lucky enough to experience a FSCS payout after holding an Icesave account, so know this only too well - some opted to hold their 1 and 2 year fixed term accounts to term and receive full interest, I wasn't so brave and took my capital + interest up to the claim date and ran. Different types of FSCS claim have different rules, hence it's important to understand the difference between savings claims, investment claims and insurance claims if taking out products that fall into those categories. As I mentioned above, I'm not an expert on FSCS claims for insurance products, so I can't explain why it is possible to have a 0% return from this type of investment as set out in the Performance Scenarios table, when there is a supposedly guaranteed interest rate set each year. For an equivalent cash LISA this would not be possible.

I also raised a pertinent point in the discussion thread from 2018 (posted by grumiofoundation above) that the timescales on FSCS claims can differ significantly depending on the type of claim. For savings, the aim is within 2 weeks, whereas for the failed credit union I mentioned in that thread the money was frozen for a couple of months, and for claims involving investments, it can take as long as a year for the FSCS to start accepting claims. I don't know where insurance claims sit on that scale, but a complex product like this might take considerably longer than 2 weeks, which could be a big problem for someone needing the money for a house deposit at that time.