Moneyfarm: is Cash ISA protected by FSCS?

_Anna_

Dear all,
I wanted to transfer my Cash ISA to Moneyfarm. According to their web site they are FSCS protected https://www.moneyfarm.com/uk/cash-isa/
However, I did not find them on the FSCS site https://www.fscs.org.uk/check/
Does anyone know whether their Cash ISA is FSCS protected and it's safe to have an account with them? Thank you.

eskbanker

Your cash is held with trusted partners and safeguarded with FSCS protection up to £85,000.

Is my money safe?

As an investment firm authorised and regulated by the FCA, Moneyfarm is obligated to segregate client funds and assets. This means that your money and investments are held separately from Moneyfarm’s own bank account and cannot be mixed with our own funds.

We believe that the safest way of looking after your investments is to appoint a custodian bank which holds your money and the investments we purchase on your behalf, with a reference number unique to you. We hold your money and investments using carefully selected, regulated financial institutions such as Barclays and Saxo Capital Markets UK Ltd, and we ensure that they meet the relevant criteria to keep your money safe at all times.

Your funds are held with MFM Investment Ltd, which is covered by the Financial Services Compensation Scheme (FSCS). This guarantees coverage of up to £85,000 for your investments across all brands operating under MFM Investment Ltd. Please be aware that if you hold accounts with multiple brands or platforms managed by MFM Investment Ltd, the FSCS protection limit of £85,000 applies collectively to all your accounts. This means that the total coverage for your investments held with any and all brands or platforms under MFM Investment Ltd is capped at £85,000, regardless of the number of accounts you have.

https://www.moneyfarm.com/uk/contact-us/#faqs

Eyeful

1. The FSCS protection up to £85K only applies to
Banks, Building Societies & Credit Unions that are on their list:
https://www.fscs.org.uk/check/check-your-money-is-protected/

2. Platforms are not covered by the FSCS protection.
Any FSCS they mentioned, comes from the banks they put your money into.
It is up to you to check:
(a) Those banks are covered by the FSCS.
(b) What protect you have, if the platform runs into trouble before your money is put into those banks.
 

_Anna_

Eyeful said:

1. The FSCS protection up to £85K only applies to
Banks, Building Societies & Credit Unions that are on their list:
https://www.fscs.org.uk/check/check-your-money-is-protected/

2. Platforms are not covered by the FSCS protection.
Any FSCS they mentioned, comes from the banks they put your money into.
It is up to you to check:
(a) Those banks are covered by the FSCS.
(b) What protect you have, if the platform runs into trouble before your money is put into those banks.
 

Thanks, but the point 2a raises further questions. Will Moneyfarm let me know what is the bank my money will be held into? First, I need to be sure that my money is protected by FSCS. Second, if I have another accounts in this bank  the total amount should be less than 85K.

Eyeful

1. I personally do not deal with any company that makes important information either hard to find or requires me to contact them, to extract that information because they do not state it. Therefore I will not use this company..

2. As I understand it, the £85k is for all the money you have in that bank or building society. Which is why I think at they should at least state which banks they are going to be using for their cash ISA. 

3. Why do you want to use a middle man and not go directly to a bank or building society?
At least that way you would be able to confirm the amount of FSCS protection you are getting. 

4. If you want a 100% protection for your money there is always NS&I. The interest you will get however may not be the highest.

masonic

_Anna_ said:

Eyeful said:

1. The FSCS protection up to £85K only applies to
Banks, Building Societies & Credit Unions that are on their list:
https://www.fscs.org.uk/check/check-your-money-is-protected/

2. Platforms are not covered by the FSCS protection.
Any FSCS they mentioned, comes from the banks they put your money into.
It is up to you to check:
(a) Those banks are covered by the FSCS.
(b) What protect you have, if the platform runs into trouble before your money is put into those banks.
 

Thanks, but the point 2a raises further questions. Will Moneyfarm let me know what is the bank my money will be held into? First, I need to be sure that my money is protected by FSCS. Second, if I have another accounts in this bank  the total amount should be less than 85K.

You should not be asking "is the money protected", you should be asking "do I have sufficient protection if ...".

Should MFM Investment Ltd. go bust, then you have protection up to £85k in respect of that. You won't find that on the FSCS savings checker because that service is incomplete and only considers deposit takers. That is a flaw with the website. Whereas the Financial Services Register provides a more comprehensive picture.

Should some other bank which MFM uses for client money go bust then again you will have FSCS protection up to £85k in respect of that. But if you hold greater than £85k savings in total it is possible this could exceed the limit if you have direct and indirect deposits at this bank. Obviously this is only an issue for those with very large sums of cash that wouldn't qualify for temporary high balance protection. Only these few would need to care about the identity of the partner bank(s).

pecunianonolet

Regardless of the protection questions, which is not as clear and transparent as it should be and a reason I would not use them. 

Interest is paid annually and the bonus is only paid if you keep the account open for 12 months with a minimum balance of £500. 

They accept transfer in requests and must by law allow transfer out requests but all I could find is below.

So if you open the account to benefit from the headline rate and make a, let's say 20k contribution on 6th of April, but in July the rate drops to a very uncompetitive and low rate you may want to move it back out. If they now only allow a full transfer out of current year funds you would not have been eligible for the bonus and would have only earned the lower rate, currently 4.17% AER until you transfer out.

In that case you either have to wait for 12 months to get the underlying rate plus bonus or move out and get the lower rate. If it's previous year funds you could move your 19.5k elsewhere and keep the £500 in and you get the bonus for the entire 12 months.

They clearly say that your funds are not exclusively deposited with banks and building societies and most certainly will be going into QMMF's, which are not covered by the FSCS  



https://www.moneyfarm.com/uk/transfer-isa/

eskbanker

pecunianonolet said:

They clearly say that your funds are not exclusively deposited with banks and building societies and most certainly will be going into QMMF's, which are not covered by the FSCS

Where do they say that clearly for cash ISAs?

masonic

QMMFs are covered by the FSCS if they are UK domiciled, and whether or not it is UK domiciled, you'd still have FSCS protection if MFM went bust. I'm not aware of any evidence that QMMFs are in fact used in any cash ISAs, at MFM or elsewhere. I think the FCA would take a dim view of that as it would place an unreasonable risk on the provider, given the characteristics of a cash ISA.

pecunianonolet

eskbanker said:

pecunianonolet said:

They clearly say that your funds are not exclusively deposited with banks and building societies and most certainly will be going into QMMF's, which are not covered by the FSCS

Where do they say that clearly for cash ISAs?

It is on the ISA page as well as on any other page. So in that case I would assume that they invest cash. They not say explicitly that they don't. Even if they don't, it is highly misleading having this statement on this specific page. 

masonic said:

QMMFs are covered by the FSCS if they are UK domiciled, and whether or not it is UK domiciled, you'd still have FSCS protection if MFM went bust. I'm not aware of any evidence that QMMFs are in fact used in any cash ISAs, at MFM or elsewhere. I think the FCA would take a dim view of that as it would place an unreasonable risk on the provider, given the characteristics of a cash ISA.

You are probably right, however, it is not specified anywhere and I remember the numerous conversations when Trading212 started to pay interest for uninvested funds in their S&S ISA and you had to agree that you are accepting the risk and that all or part of your funds may be invested. This was before they introduced a Cash ISA where they explicitly stated that funds are held with reputable banks. At least they tell you before which ones they use. 

The absence of proper T&C's and answers to some basic questions make them unusable for me. Even if they would pay me 6%+, I would not trust them.

palemist

I just came across MoneyFarm under the 'non-standard' Cash ISA section today and scooted over to the forums to see what people are saying about them. I've got my Cash ISA currently with Trading 212 which has recently dropped from 4.9% to 4.5%, very tempting to transfer into Money Farm but from reading the comments here, the lack of transparency is the deal breaker for me, so I'll stick with T212 for now.