Best Cash ISAs by MoneySavingExpert - unknown brands not protected by FSCS??

Sarahspangles

Albermarle said:

Sarahspangles said:

gardigest said:

Sarahspangles said:

This is their claim, it’s a different FRN number for the savings element.

Thanks, Sarah. I guess I'm going through a process of clarification in my head, seeing as I'm new to this and naturally a cautious person. Getting feedback from others helps. The FRN number guarantees that Tembo is registered with the FCA - basically allowing it to legally operate financial services. But its FSCS situation of "non-protection" is not of concern because it's the partner banks (Barclays and Bank of Scotland) who need to have that FSCS protection working properly. That's what i'm gleaning in any case.

I generally choose not to transact with any ‘new kids on the block’ whether financial services or utility providers. Not so much because I think my money is at risk but because a couple of my nearest and dearest have had frustrating issues with apps and processes operated by new setups. Let other customers knock the edges off the issues first, I’m not desperate for the small financial advantage they present.

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

Yes that’s another point with these ‘disruptor innovations’ - we may come to miss the businesses they displace. By which time, they’ve cornered the market and put up their prices. From football on terrestrial TV to high street banking to book shops, it’s happening everywhere.

gardigest

dunstonh said:

 The FRN number guarantees that Tembo is registered with the FCA - basically allowing it to legally operate financial services.

Being authorised by the FCA doesnt mean everything that the firm does is regulated by the FCA or have FSCS protection.   Only regulated services get FSCS protection.

I see. You're (rightly) clarifying for me the distinction between "authorised" and "regulated". It's all new to me lol. However, I've just checked up on Tembo's FRN 928010 at FCA's website and apparently the company is both authorised AND regulated. Even so, the FSCS database tells me "Not Protected".

gardigest

masonic said:

gardigest said:

Thanks, I did see that, but I'm aware of scams too (especially with non-household names) and, being fairly new to placement of savings, I'm cautious. You have to admit that going to the FSCS website only to be told NOT PROTECTED, might set off some alarm bells.

The FSCS website is not very reliable. You can use the FCA register https://register.fca.org.uk/s/ to confirm that the firm has the necessary regulatory permissions. FSCS protection comes from being an authorised firm offering relevant regulated services. Tembo Savings' entry: https://register.fca.org.uk/s/firm?id=0014G00002WKfXnQAL

You can use the firm details to verify you are dealing with the genuine firm.

Old, but still relevant: https://forums.moneysavingexpert.com/discussion/5892874/when-fscs-protection-does-not-apply

Thanks for the precision and the links. I see you're very knowledgeable about the nitty gritty. I read your 09/09/2018 post and took note of the important permissions to look out for on Tembo's FCA entry, which I've just consulted. Although "This firm can hold and can control client money" makes no mention of an obligation to protect client money (unlike the example given in your post), would I be right in presuming that the protection comes from the FSCS status of Barclays and Bank of Scotland (where Tembo ring-fences client's money)? 

I say this because, again, in your 09/09/2018 post, you mention Raisin UK as being "carefully scrutinised...and does offer FSCS protection". This too is a company which shows as Not Protected in the FSCS database (today). Like with Tembo, I'm guessing that the protection comes from the banks where the third party (Raisin, Tembo) places the money(?)

masonic

gardigest said:

dunstonh said:

 The FRN number guarantees that Tembo is registered with the FCA - basically allowing it to legally operate financial services.

Being authorised by the FCA doesnt mean everything that the firm does is regulated by the FCA or have FSCS protection.   Only regulated services get FSCS protection.

I see. You're (rightly) clarifying for me the distinction between "authorised" and "regulated". It's all new to me lol. However, I've just checked up on Tembo's FRN 928010 at FCA's website and apparently the company is both authorised AND regulated. Even so, the FSCS database tells me "Not Protected".

This is the bit that is relevant:

Client Money permission means that they are authorised to hold and control your money, and are obligated to follow CASS rules and ring-fence it from their own assets. If they went bust while holding any of your money you'd be eligible for FSCS protection. This would cover any shortfall of the money that was supposed to be held in their partner banks.

The FSCS savings checker only covers deposit takers, so to check protection you'd need to enter the relevant deposit takers, in this case Barclays and Bank of Scotland, rather than Tembo itself. FSCS does not consider the broader protections that a customer would need to consider when evaluating aggregators like Tembo, Raisin, Chip, Plum, etc.

gardigest

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

A "loss leader"? Meaning they intentionally want to go bust? Or they are trying to incite customers to get on board with them and invest in other more profitable (for Tembo) products ?

masonic

gardigest said:

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

A "loss leader"? Meaning they intentionally want to go bust? Or they are trying to incite customers to get on board with them and invest in other more profitable (for Tembo) products ?

A loss leader is a product that is deliberately provided at a loss to the provider in order to build a customer base for future profitable activities. In financial services, companies can be loss making for several years before attempting to reach profitability, as it is a very difficult market to crack. Sometimes the end goal is just to have the business sold to a larger player for the underlying services or customer base that have been built.

fuzzzzy

gardigest said:

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

A "loss leader"? Meaning they intentionally want to go bust? Or they are trying to incite customers to get on board with them and invest in other more profitable (for Tembo) products ?

A bit like when all the supermarkets advertise super cheap veg at xmas, hoping that once you are in there you'll spend lots of money on other stuff too.

gardigest

Client Money permission means that they are authorised to hold and control your money, and are obligated to follow CASS rules and ring-fence it from their own assets. If they went bust while holding any of your money you'd be eligible for FSCS protection. This would cover any shortfall of the money that was supposed to be held in their partner banks.

The FSCS savings checker only covers deposit takers, so to check protection you'd need to enter the relevant deposit takers, in this case Barclays and Bank of Scotland, rather than Tembo itself. FSCS does not consider the broader protections that a customer would need to consider when evaluating aggregators like Tembo, Raisin, Chip, Plum, etc.

Thanks for all your help. Yes, I checked Barclays and Bank of Scotland - they offer the £85,000 protection.

gardigest

masonic said:

gardigest said:

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

A "loss leader"? Meaning they intentionally want to go bust? Or they are trying to incite customers to get on board with them and invest in other more profitable (for Tembo) products ?

A loss leader is a product that is deliberately provided at a loss to the provider in order to build a customer base for future profitable activities. In financial services, companies can be loss making for several years before attempting to reach profitability, as it is a very difficult market to crack. Sometimes the end goal is just to have the business sold to a larger player for the underlying services or customer base that have been built.

Ahhh right! Sometimes loss leading is to suck clients in to go for more profitable stuff. But also it can be a strategy for building up a business (eg. its services and client list) in the aim of reselling it.

gardigest

fuzzzzy said:

gardigest said:

Also as I understand it these cash ISA's with Tembo and T212, just put your money in a bank account, and are effectively just passing on the interest and making zero ( possibly minus) profit, as some kind of loss leader.
If I have understood it properly ( and I have not studied it that closely) it is a bit of an odd business model, so for that reason I have not been rushing in either. Although a family member does have a T212 cash ISA with no issues.

A "loss leader"? Meaning they intentionally want to go bust? Or they are trying to incite customers to get on board with them and invest in other more profitable (for Tembo) products ?

A bit like when all the supermarkets advertise super cheap veg at xmas, hoping that once you are in there you'll spend lots of money on other stuff too.

Personally, I go for the yellow sticker stuff, that's almost out of date. Works out even cheaper than their promotional reductions. And it's rare that I get enticed into buying more expensive stuff lol. But I get your point.