Money pending in Chip not covered by FSCS

fly-catchers

I read that any money you have pending in either deposit or withdrawing is not cover by the FSCS if Clearbank went bust. Is that likely to ever be an issue as I would assume most transactions would be quite fast unless you used a debit card for depositing?

bgr62

I opened Chip via a referral code and deposited £5k on Friday, checked just now and that payment is still a 'pending deposit' on the app although the amount has been taken successfully from Halifax. Annoying but I should hope it clears by tomorrow, next time I'll use Apple Pay or Bank Transfer.

flaneurs_lobster

bgr62 said:

I opened Chip via a referral code and deposited £5k on Friday, checked just now and that payment is still a 'pending deposit' on the app although the amount has been taken successfully from Halifax. Annoying but I should hope it clears by tomorrow, next time I'll use Apple Pay or Bank Transfer.

Was that deposit by Open Banking or by debit card? 

Exodi

fly-catchers said:

I read that any money you have pending in either deposit or withdrawing is not cover by the FSCS if Clearbank went bust. Is that likely to ever be an issue as I would assume most transactions would be quite fast unless you used a debit card for depositing?

Could you link your source for this?

EDIT: found it myself

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

How are pending transactions (deposits, autosaves, recurring saves, and withdrawals) protected?

This money is not covered by FSCS, but it is protected through the FCA’s safeguarding rules.

Your money is kept separately from our own company money in a safeguarded account with an approved bank (currently ClearBank Ltd) that creditors can’t access.

There’s no limit to the amount protected through safeguarding, but some costs could be taken by the administrator or liquidator if we were to fail. This could impact the amount that you receive, and it could take longer to get your money back than if it were held directly with a bank.

Band7

This is correct for deposits but only an issue if you make a deposit by card or ApplePay/Google Wallet. You also don't get interest for the 3 working days it takes for your money to clear. Other than for slightly unnatural purposes, I can't see any reason why anyone would use card/ApplePay/Google Wallet.

I can't see any reason why withdrawals would not be covered by FSCS as the money arrives instantly from Clearbank into your current account. Am I missing something?

Band7

bgr62 said:

I opened Chip via a referral code and deposited £5k on Friday, checked just now and that payment is still a 'pending deposit' on the app although the amount has been taken successfully from Halifax. Annoying but I should hope it clears by tomorrow, next time I'll use Apple Pay or Bank Transfer.

It takes 3 working days to clear card deposits. No FSCS or interest on pending amounts. You get the same issue when using ApplePay.

Always use Bank Transfer from within CHIP, or send your money by Faster Payment from your bank account. Your money gets credited/cleared instantly, is instantly FSCS protected, and starts earning interest from the next day.

bgr62

Thanks guys, deposit was via a debit card. I will use the bank transfer option next time. Should be cleared tomorrow too. 

masonic

Band7 said:

I can't see any reason why withdrawals would not be covered by FSCS as the money arrives instantly from Clearbank into your current account. Am I missing something?

If the withdrawal was held for security checks, it wouldn't be eligible for FSCS protection as Chip would have already debited your account. I'm not aware of any real world instances of withdrawals being held for checks.

Band7

masonic said:

Band7 said:

I can't see any reason why withdrawals would not be covered by FSCS as the money arrives instantly from Clearbank into your current account. Am I missing something?

If the withdrawal was held for security checks, it wouldn't be eligible for FSCS protection as Chip would have already debited your account. I'm not aware of any real world instances of withdrawals being held for checks.

Fearing this is a bit like not leaving the house because you might get run over by a car and die.

masonic

Band7 said:

masonic said:

Band7 said:

I can't see any reason why withdrawals would not be covered by FSCS as the money arrives instantly from Clearbank into your current account. Am I missing something?

If the withdrawal was held for security checks, it wouldn't be eligible for FSCS protection as Chip would have already debited your account. I'm not aware of any real world instances of withdrawals being held for checks.

Fearing this is a bit like not leaving the house because you might get run over by a car and die.

It would be the case with any account, so not something to specifically hold against Chip. Likewise for pending debit card deposits, since the funds only leave the sending bank once the transaction completes. I don't know why Chip gets singled out for this when there are plenty of savings accounts where money may spend time in limbo before arriving at the destination account.