(New) CMC Invest - Flexible Cash ISA - 4.85% (allows transfers)

Nath4n

Good morning,

Forgive me but this appears new and has started just this morning appearing in my targeted ads.

CMC Invest appear to have boosted their Flexible (+ allowing transfers) Cash ISA to 4.85%. This appears to have been a previous rate, but I'm not clear if it was cut and then has now boosted back up. Perhaps someone can cast some light?

https://www.cmcinvest.com/en-gb/cash-isa

This is the standard rate (no boost) and comfortably puts it at the top of the league tables, but I don't yet see it listed as such. I cannot see clear information on withdrawal timelines, but again perhaps someone can give personal experience.

That's just enough of a rate disparity to tempt me away from T212 after the recent cut..

slinger2

Looks like you get 2 weeks notice of a rate reduction which is typical for an easy access account. Cash ISA is flexible.

However: "10.5. We may hold some or all of your Cash ISA Cash in a Qualifying Money Market Fund (“QMMF”) or across several QMMFs." which may put some people off. T212 (as I remember) specifically say they won't hold Cash ISA money in QMMFs."

although "10.10. In offering this Cash ISA product, we have elected to opt-in to the FCA’s client money rules and so your Cash ISA Cash not held in QMMF(s) will be held as client money in accordance with CASS 7. Where we hold your Cash ISA Cash in QMMF(s), your Cash is still treated as client money but converted to units in the QMMF(s) and those units will be held as safe custody assets protected under the FCA’s client asset custody rules in accordance with CASS 6. Therefore, if CMC Invest were to become insolvent, where we hold your Cash ISA Cash in QMMF(s), any client money will be protected under CASS 7 and your QMMF units will be protected under CASS 6. If the QMMF provider or custodian were to become insolvent, you may be afforded protection under FSCS in certain circumstances. Further information on QMMF protections is set out on the Website." (if anyone can understand that please explain)

flaneurs_lobster

If you have an account with CMC then the Cash ISA takes about 10 seconds to open.

Cynical Me says this is a mopping-up exercise trying to find those punters who have a bit of allowance left before April 5 and that this rate will rush South as soon as the new year starts.

Might still xfer across from a less-generous Virgin Flex, T&C seem to have no restrictions on partial vs full transfers.

flaneurs_lobster

slinger2 said: (or rather the CMC T&Cs say)

If the QMMF provider or custodian were to become insolvent, you may be afforded protection under FSCS in certain circumstances.

I really don't like those kind of conditional assurances. As @slinger asks, what does that actually mean for my ££ if a provider goes castors-up.

legasov

slinger2 said:

although "10.10. In offering this Cash ISA product, we have elected to opt-in to the FCA’s client money rules and so your Cash ISA Cash not held in QMMF(s) will be held as client money in accordance with CASS 7. Where we hold your Cash ISA Cash in QMMF(s), your Cash is still treated as client money but converted to units in the QMMF(s) and those units will be held

Exactly. This way you loose the FSCS protection. I guess we won't see them in the top charts because this Cash ISA is not FSCS protected.

Albermarle

legasov said:

slinger2 said:

although "10.10. In offering this Cash ISA product, we have elected to opt-in to the FCA’s client money rules and so your Cash ISA Cash not held in QMMF(s) will be held as client money in accordance with CASS 7. Where we hold your Cash ISA Cash in QMMF(s), your Cash is still treated as client money but converted to units in the QMMF(s) and those units will be held

Exactly. This way you loose the FSCS protection. I guess we won't see them in the top charts because this Cash ISA is not FSCS protected.

Some of it might be.

Where we hold your Cash ISA money with a bank (currently that bank is National Westminster bank) and if the bank were to fail, your money is protected by the FSCS up to a total of £85,000. This total applies to all deposits you have with the bank and not just the money that has been deposited through your Cash ISA with us.

Where we hold your Cash ISA money in a QMMF and the fund manager of the QMMF or the custodian were to fail, you may be afforded protection under FSCS in certain circumstances. For instance, you may receive protection if the fund manager or custodian were to commit a civil liability whereby a UK court ruled that it had committed negligence, misrepresentation or a breach of the FCA's rules.

pecunianonolet

To me this sounds all rather simple. 

1. You have no influence on where your money is held, in a bank, in a QMMF's or in a combination of both., with the latter being the most realistic scenario. Split and proportions can change at any time

2. Should they go bust, the part held with a bank is protected, the rest held in QMMF's may, under certain circumstances and with the involvement of courts, be protected. The safest would be to assume it is not protected and at risk

3. The given return is above the BOE rate so by just depositing funds at the BOE alone, CMC invest would make a loss. The likelihood that all or most of the funds are in higher return investments is logical so they can pay us the promised return, take their cut to fund operations and they may want to make a profit too.

4. An interest rate is nothing else than a price for risk. High risk = high returns, low risk = lower returns

If this product is suitable depends on the level of risk aversion. 

There are various types of QMMF's, they are usually very liquid, provide generally higher returns than bank accounts, are generally considered low risk. On the contrary, they are sensitive to interest rate fluctuations and monetary policy. I personally think the risk is manageable, due to my risk appetite level, but would say that the risk in general, especially due to sudden policy changes and overall fragile macroeconomic outlook has increased compared to maybe a year ago.

More about QMMF's here: https://monevator.com/money-market-funds/

or here: https://forums.moneysavingexpert.com/discussion/6450475/whats-the-risk-with-money-market-funds

Excuse my political statement but I see this mainly driven by white, or better orange house wrecking ball moves. 

Last but not least, likely a headline rate as marketing tool to draw in funds to a certain level and to grow market share and the consumer base before the rate will move more in line with the overall market range. 

xylophone

Just apropos of CMC - relative transferred a cash isa to them a few weeks back and has been satisfied with their product.

This morning came an unexpected delivery - a tote bag from CMC containing a hard back note book, charger and cool bottle for travel .... 

flaneurs_lobster

xylophone said:

Just apropos of CMC - relative transferred a cash isa to them a few weeks back and has been satisfied with their product.

This morning came an unexpected delivery - a tote bag from CMC containing a hard back note book, charger and cool bottle for travel .... 

Are those gifts taxable or are they covered under the ISA.....

MeteredOut

xylophone said:

Just apropos of CMC - relative transferred a cash isa to them a few weeks back and has been satisfied with their product.

This morning came an unexpected delivery - a tote bag from CMC containing a hard back note book, charger and cool bottle for travel .... 

I had to do a quick survey to get these - not received them yet though. Did you get them without the survey?

xylophone

Are those gifts taxable or are they covered under the ISA.....

They seem to me akin to the piggy banks or biros that used to be handed out at account openings....