Moneybox and FSCS

System

This discussion was created from comments split from: UPDATE: ISA Transfer - they lost my money! 😖 (Do you lose interest when switching?).

DixyD

Having read the chain of comments above my concerns about transferring an ISA into the Moneybox cash ISA have just been elevated.  I have undertaken transfers between providers in the past and had no problems but these have involved established banks and building societies but Moneybox is neither of these.

My initial problem was one surrounding the FSCS and how this worked within Moneybox as it appears that whilst they claim they are covered by the scheme this is not the case when you check with FSCS; they are recognised by the FCA.  

Normally, if you open an ISA with a bank or BS you have an account number linked directly to your name and therefore providing that the institution is part of the FSCS you can claim if the organisation goes into administration or liquidation; you have all the necessary information to hand.  In respect of Moneybox, they are not a bank and only invest your money with partner financial institutions.  Moneybox claim that all the financial institutions they use are covered under the FSCS and they will recover your funds up to £85k; however, what happens if Moneybox goes into administration/insolvency?  Your account is with Moneybox not the respective banks and so what documentation do you have to prove you have money invested in the banks?  If Moneybox as the ‘middle man’ was to go into liquidation etc how could you gain access to your funds in individual banks?

If anyone could help clarify this it would be much appreciated but in the meantime I think I should refrain from taking any further action.

TIA

Idpullthecurtain

DixyD said:

Having read the chain of comments above my concerns about transferring an ISA into the Moneybox cash ISA have just been elevated.  I have undertaken transfers between providers in the past and had no problems but these have involved established banks and building societies but Moneybox is neither of these.

My initial problem was one surrounding the FSCS and how this worked within Moneybox as it appears that whilst they claim they are covered by the scheme this is not the case when you check with FSCS; they are recognised by the FCA.  

Normally, if you open an ISA with a bank or BS you have an account number linked directly to your name and therefore providing that the institution is part of the FSCS you can claim if the organisation goes into administration or liquidation; you have all the necessary information to hand.  In respect of Moneybox, they are not a bank and only invest your money with partner financial institutions.  Moneybox claim that all the financial institutions they use are covered under the FSCS and they will recover your funds up to £85k; however, what happens if Moneybox goes into administration/insolvency?  Your account is with Moneybox not the respective banks and so what documentation do you have to prove you have money invested in the banks?  If Moneybox as the ‘middle man’ was to go into liquidation etc how could you gain access to your funds in individual banks?

If anyone could help clarify this it would be much appreciated but in the meantime I think I should refrain from taking any further action.

TIA

Im sure my issue here was an isolated cockup.  And as annoying as its been, I imagine it doesnt happen often.  However this issue did make me aware of how poor their Customer Service is.  So that should be a concern to anyone.

masonic

DixyD said:

Having read the chain of comments above my concerns about transferring an ISA into the Moneybox cash ISA have just been elevated.  I have undertaken transfers between providers in the past and had no problems but these have involved established banks and building societies but Moneybox is neither of these.

My initial problem was one surrounding the FSCS and how this worked within Moneybox as it appears that whilst they claim they are covered by the scheme this is not the case when you check with FSCS; they are recognised by the FCA.  

Normally, if you open an ISA with a bank or BS you have an account number linked directly to your name and therefore providing that the institution is part of the FSCS you can claim if the organisation goes into administration or liquidation; you have all the necessary information to hand.  In respect of Moneybox, they are not a bank and only invest your money with partner financial institutions.  Moneybox claim that all the financial institutions they use are covered under the FSCS and they will recover your funds up to £85k; however, what happens if Moneybox goes into administration/insolvency?  Your account is with Moneybox not the respective banks and so what documentation do you have to prove you have money invested in the banks?  If Moneybox as the ‘middle man’ was to go into liquidation etc how could you gain access to your funds in individual banks?

If anyone could help clarify this it would be much appreciated but in the meantime I think I should refrain from taking any further action.

Moneybox is a trading name of Digital Moneybox Limited (FCA: 712935). If you look it up on the financial services register, you'll see it holds Client Money permissions, so it is covered by the FSCS for any shortfall of capital in its client money account if it enters Special Administration holding your money. Administrator costs must also be accounted for when calculating FSCS compensation, so in practice the available compensation for money they held on your behalf would be somewhat less than £85k. However, the third party banks they have partnered with would be holding the money the vast majority of the time and one of the priority actions for the Joint Special Administrators would be to protect and use the electronic records of deposits to enable these providers to repay your deposit and interest (along with an additional permitted subscription statement) in the event the infrastructure at Moneybox isn't operational. Most likely the JSA would keep the infrastructure operational during the wind-down or sale of the platform to a competitor so that money could be transferred out in the usual ways. It's also possible that the third party banks are provided with customer information.

DixyD

Idpullthecurtain:

Many thanks for your help and reply.  When I penned this question I also submitted a query to Moneybox Customer Services to which I received a holding reply saying they “were experiencing high demand at the present time …” and would get back to me within 48 hours; still no reply!  As you say poor customer service; unprofessional and not a good image.

Masonic:

As above, again many thanks for your help and information.  I checked with both the FCA and confirmed they were registered.  I then checked with the FSCS using the registration number (as you note) but unfortunately there is nothing there.  I can see that Moneybox say they do not hold clients money and that they distribute it to third party banks that they partner with and these banks are covered by the FSCS scheme.  However, if my understanding is correct, Moneybox will deposit the funds with the banks and there is no specific account in my name so if Moneybox ceases to trade, how do I know how much of my money is with which bank and what information can I use to formulate a claim?  

I think in all probability undertaking savings involving a ‘third party’ ie Moneybox is not for me.  I much prefer to have clarity of exactly where my money is and hold documentation from the specific bank/s which clearly show their terms and conditions etc.
As I say thanks for your help but I think considering my concerns and the lack of support/guidance from Moneybox Customer Services I will close the account and take my business elsewhere.

masonic

DixyD said:

Masonic:

As above, again many thanks for your help and information.  I checked with both the FCA and confirmed they were registered.  I then checked with the FSCS using the registration number (as you note) but unfortunately there is nothing there.  I can see that Moneybox say they do not hold clients money and that they distribute it to third party banks that they partner with and these banks are covered by the FSCS scheme.  However, if my understanding is correct, Moneybox will deposit the funds with the banks and there is no specific account in my name so if Moneybox ceases to trade, how do I know how much of my money is with which bank and what information can I use to formulate a claim?  

I think in all probability undertaking savings involving a ‘third party’ ie Moneybox is not for me.  I much prefer to have clarity of exactly where my money is and hold documentation from the specific bank/s which clearly show their terms and conditions etc.
As I say thanks for your help but I think considering my concerns and the lack of support/guidance from Moneybox Customer Services I will close the account and take my business elsewhere.

I think I covered the 'how will they know how much of my money is with which bank' bit in my earlier reply, but it is broadly in line with how any failed bank would know how much money was yours.

On the FSCS savings checker, this only includes banks and building societies, not other financial services where FSCS protection applies, such as the service operated by Moneybox.

However, you may have seen other threads where it has been claimed by Moneybox itself within the app that "interest due" is not covered and this is something of a concern.