Plum App Money Security

Missinglink47

I recently began using the Plum App to put savings aside, it has been working fine for me for small savings and allowing me to use the money saved when necessary. I decided recently I wanted to invest a larger amount in the stocks and shares part of the app but after speaking to my dad he warned me to check if the app is protected by the FSCS. I honestly haven't a clue about things like this but decided to ask the Plum staff who came back with this -

"When you deposit money in a bank, the bank will usually lend out (part of) your deposits. This is how a bank makes most of its money! What this means is that your money is effectively “at risk” if the bank goes bankrupt, hence there is a need for deposit insurance, commonly known as FSCS, for up to £85,000. Your Plum savings are deposited in a secure account and held as e-Money by Payrnet, our e-Money provider. This means your money is ring-fenced and cannot be lent out by the bank. It also cannot be claimed by any of Payrnet's creditors. This means if the holding bank, our e-Money provider, or ourselves go bankrupt you will not lose any of your money. This is very important to us and will always be the case with your Plum deposits. You can read more about that here. In a nutshell, the money is equally safe – if not safer – with Plum vs your bank"

It sounds good to me but having no knowledge of finance and all that goes with it I would have no idea if this is just a load of waffle!

Any help would be greatly appreciated, I did wonder if the response was directed at the savings part of the app rather than the investment part.

Cheers

DireEmblem

Martin Lewis did covered this briefly I think on this morning earlier this week.

What does concern me, is the statement "the money is equally safe - if not safer - with Plum vs your bank" - particularly the piece highlighted.

Plum themselves I believe do not have FSCS status, but hold any cash in a segregated account/provider.  For the investment piece - the underlying funds are fine, its the relationship on how Plum holds your investment in the funds that needs to be clarified.

I would also note - as they highlight on their website, they charge you £1 a month to invest in their selection of funds.  You can avoid this charge, if you open up a S&S ISA account with another provider, such as Cavendish online or direct with Vanguard, depending which funds are of interest.

DireEmblem

The short answer, is no - Plum does not have FSCS status yet, and imo their charges are expensive if investing small amounts.

csgohan4

https://monevator.com/

is a good website to start your research and look at which platform. Don't rely on your own bank for your needs. Loyalty does not pay. 

Missinglink47

Thank you everyone for your replies, this all makes sense and I suppose I just sent with Plum as it was easy to set up. I'll do some research and look into a decent savings account to open with an ISA looking like best at the moment.

jimjames

Missinglink47 said:

Thank you everyone for your replies, this all makes sense and I suppose I just sent with Plum as it was easy to set up. I'll do some research and look into a decent savings account to open with an ISA looking like best at the moment.

Before you jump into a cash ISA make sure it really is the best, have you compared rates? The ones I've seen recently were dire and easily beaten by instant access accounts