Top Savings Accounts recommendations - Chip Financial not as it seems

gmanhampshire

Chip comes up as one MSE's best paying Savings Account via the newsletter (3.15% as of 21 Feb 2023), and I looked into it with intrigue.

BUT, I think MSE should make readers aware that Chip is not a bank and whilst they are "FSCS authorised", investors have zero protection on their money according to the FSCS database for the Chip Instant Access Account suggested by MSE. 

I'm of course aware that investors need to make their own checks and MSE only offers advice but I'm troubled because Chip claim to be FSCS authorised for the Chip Instant Access Account on their website footer, but according to the FSCS, investors are not protected for any of their investment.


This seems to be misrepresentation, possibly for the FSCS to look into but almost certainly for MSE and it's readers to avoid?

@MSE & @Martin - your thoughts?

Thanks

G

AndyTh_2

Chip doesn't hold your money, they put it in Clearbank savings accounts (or Alica for older savings products) opened per customer, with £85k FSCS protection.

Whilst it's good to check these things, the full story isn't shown by those sites

grumbler

Reportedly, their savings accounts are provided by ClearBank covered by FSCS.

https://www.finextra.com/newsarticle/39101/chip-launches-fscs-protected-accounts-with-clearbank

eskbanker

https://www.getchip.uk/the-blog/how-we-protect-your-money

AmityNeon

You claim that they claim themselves to be "FSCS authorised", but in actuality, they make no such claim, so you are misrepresenting Chip. FSCS protection/compensation is not automatically afforded to an entire institution's offerings just because that institution happens to be authorised by the FCA to conduct certain regulated activities.

As per the footer image you provided:

Note that Chip is not a bank. Only eligible deposits held in the Chip Prize Savings Account and the Chip Instant Access Account powered by ClearBank, and our Interest Accounts are covered by the Financial Services Compensation Scheme.

eskbanker

AmityNeon said:

As per the footer image you provided:

Note that Chip is not a bank. Only eligible deposits held in the Chip Prize Savings Account and the Chip Instant Access Account powered by ClearBank, and our Interest Accounts are covered by the Financial Services Compensation Scheme.

To be fair, that is poorly punctuated and a single comma would make it clearer:

Note that Chip is not a bank. Only eligible deposits held in the Chip Prize Savings Account and the Chip Instant Access Account powered by ClearBank, and our Interest Accounts, are covered by the Financial Services Compensation Scheme.

Band7

gmanhampshire said:

 I think MSE should make readers aware that Chip is not a bank

A company doesn't need to be a bank to offer products which have FSCS protection. Plenty of examples - e.g. Building Societies, Savings platforms like Raisin and Flagstone.

It's perfectly safe to deposit up to £85k into the CHIP savings account, or into their 90 days notice account (although that one has a terrible interest rate). They have some other products which are not FSCS protected but they don't figure in anyone's league tables.

gmanhampshire

Thanks for all your feedback, appreciated. 
On reflection I suppose what I get from this is that I categorise this as 'investments' rather than 'banking' and as such needs to be approached with care, experience and wordsmith analysis.  For people like me, that means I'll stay with retail banking and it's mediocre returns because I don't have the time to dedicate to anything more complex.

No need to reply, just my own take.  Cheers.  G

DireEmblem

gmanhampshire said:

I'll stay with retail banking and it's mediocre returns.

It helps to have several accounts.
RBS/Natwest regular saver rates of 6%
First Direct regular saver rates of 7%.
Then you just need an easy access account which most are around 3% for cash to sit until you can deposit into the regular saver.

eskbanker

gmanhampshire said:

On reflection I suppose what I get from this is that I categorise this as 'investments' rather than 'banking'

No idea how you've reached that conclusion!  It's definitely saving rather than investing, but is undoubtedly a lesser-known name without a high street presence (like many others), and relying on a third party for depositing - it's legitimate to view this as slightly more risky than more mainstream players but it still has protection against capital loss, guaranteed by FSCS, so isn't investing in any conventional sense of the word....

nottsphil

AndyTh_2 said:

Chip doesn't hold your money, they put it in Clearbank savings accounts (or Alica for older savings products) opened per customer, with £85k FSCS protection.

And that's the troubling thing for me. Clearbank don't have a numbered account with my name on it AFAIK. If they did then surely I would have a right to interact with it? So, how do we know that the FSCS won't simply apply the £85,000 limit to this single account, which when divided amongst savers might result in us getting, IDK, a penny for every £10,000 of our balance?