Trading 212 cash ISA

nimbusnut

Cash ISA's are said to be protected by the FSCS. However T&C for Cash ISA's, in clause 5, refers to Invest T&Cs. In invest T&Cs, clause 14 seems to indicate the FSCS only relates to failure by Trading 212 but not to the third part accounts. My understanding of this is as follows:

In the event of IG's insolvency:

Any money held in segregated client money accounts by third parties or in Qualifying Money Market Funds (QMMFs) will be kept separate from IG's other assets and will not be available to IG's creditors. Your money will be protected and returned to you.

In the event of a third party's insolvency:

If a third party holding your pooled client money in segregated accounts or QMMFs becomes insolvent and there is a shortfall, you agree to share that shortfall proportionately with other clients whose money was held by that third party. So if there is a deficit, you will only get back a portion of your funds held by that third party.

In summary, your money is protected if IG becomes insolvent, but if a third party custodian holding your pooled funds fails, you may not get back 100% of those funds due to sharing any shortfall with other clients.

Perhaps anyone, or Martin, can comment on whether my understanding on this rather important point  is correct?

Perhaps the old adage applies: if the interest rate seems too good to be true, it probably is!

Mark_d

Trading 212 hold the cash balances with other banks.  I can't remember which ones, but Natwest might be one.  If £1k on your Trading 212 cash is put with Natwest, and you already have £85k saved with Natwest (possibly directly), then £1k of your deposit would not be protected.

masonic

Why do you think the rate sounds too good to be true? Base rate is 5.25%.

The text you quoted appears to relate to the S&S ISA, not the cash ISA. QMMFs are investments. The Invest T&Cs are for the Invest account.

gravel_2

Also the text quoted appears to be for IG?

dcs34

Is that definitely the T&Cs for the Cash ISA, not the S&S ISA? I had in my mind that the QMMFs only apply to the S&S ISAs.

IvanOpinion

This weeks MSE newsletter email does a pretty good job of explaining it.

- The savings have the UK £85,000 savings safety protection... yet as it isn't a bank in its own right, the normal Financial Services Compensation Scheme (FSCS) savings safety protection works differently. Your money's held in a 'client money account' via the UK arms of Barclays, JPMorgan and/or NatWest - and kept separate from Trading 212's own money. These are all fully UK regulated (we have all this in writing from the FSCS), so that ensures your money's protected.

gravel_2

https://www.trading212.com/legal-documentation/uk/isa/ISA-Terms_EN.pdf clause 5.

5.2. We will hold your Cash ISA cash in segregated Regular Bank Deposits and Term Deposits with banks, as detailed in our Invest Terms. For the avoidance of doubt, we will not use QMMFs to hold money that you have contributed to your Cash ISA. 

nimbusnut

Thanks guys for trying to explain. The Cash Isa T&Cs refer to the Invest T&Cs from which the above is taken. It's still  not clear to me that this client account    -   Barclays :-(   -  might also contain "third party" monies. Humm. I'll think I'll pass on this one.
But thanks anyway. 

bucker

Hi all, I've got a cash Isa with Chip- pretty good rate 5.10 and an Instant Access at 4.84 interest rates. They are both Fscs protected up to 85k and held in investments so even if Chip was to go bust you still get your money back, however I'm no expert on these matters can anyone else advise on Chip. 

gt94sss2

bucker said:

Hi all, I've got a cash Isa with Chip- pretty good rate 5.10 and an Instant Access at 4.84 interest rates. They are both Fscs protected up to 85k and held in investments so even if Chip was to go bust you still get your money back, however I'm no expert on these matters can anyone else advise on Chip. 

Like T212, Chip use the FSCS protection of the bank where they keep the cash.

In their case it's usually with Clearbank

xxxxxxxx

Is trading 212 likely to lower the rate (to what) within the first year and if so when?  Based on your previous experience of others like it in the past. What do you do when they lower it?