Plum not paying interest on £20k ISA after 16 months

mistermann

I signed up for a Cash ISA product with Plum in 2024. 

When I tried to withdraw some of the money to replace my car I was then told that the money was in a 'Primary Pocket' that was earning no interest, despite this being the only option when I came to pay money in. Plum did not mention this once in the intervening 16 months, despite sending me a lot of other messages telling me to pay more money into the ISA when I had already maxxed out my allowance for that tax year so it would have been illegal.

Plum have refused to pay, and sent a Final Response letter.

The product was stated as a Cash ISA too when I signed up, and on the forms sent out. There was no reference to it being a generic product or one where I needed to move money.

On top of this I even received an email from Plum which stated "From tomorrow (Friday 9 May 2025), you’ll start earning interest at the new rate of 3.75% AER (variable)* on your Cash ISA, including the 0.46% AER (variable) bonus which remains the same." So I was even told my interest was being paid when Plum are are now claiming it wasn't!

Why would a 'pocket' that doesn't earn any interest even exist, unless it was an unfair business practice purely designed to allow a company to pretend they were paying interest when they weren't? And why would a reputable company not mention that a customer was not earning interest on £20,000, even after 16 months? 

My belief is that companies cannot bury unfair terms and practices in the terms and conditions and then say 'gotcha'.

So for the next step should I simply go to the ombudsman?

I do wonder why Plum spat out the Final Response letter so quickly. Do they know something I don't - such as the ombudsman are toothless, or they just swallow everything they are told? A number of things Plum said in their replies were wilfully misleading, including claiming that I 'chose' the Primary Pocket (I did not) and that I did not send in requested information when I did and also that there was a second problem with the account which they claimed they had told me about but they did not tell me about.

The amount they would have to pay me is maybe double the ombudsman fee, so they would need to be pretty confident they would win.

What other options could I consider?

Thanks!

born_again

mistermann said:

I signed up for a Cash ISA product with Plum in 2024. 

When I tried to withdraw some of the money to replace my car I was then told that the money was in a 'Primary Pocket' that was earning no interest, despite this being the only option when I came to pay money in. Plum did not mention this once in the intervening 16 months, despite sending me a lot of other messages telling me to pay more money into the ISA when I had already maxxed out my allowance for that tax year so it would have been illegal.

Plum have refused to pay, and sent a Final Response letter.

The product was stated as a Cash ISA too when I signed up, and on the forms sent out. There was no reference to it being a generic product or one where I needed to move money.

On top of this I even received an email from Plum which stated "From tomorrow (Friday 9 May 2025), you’ll start earning interest at the new rate of 3.75% AER (variable)* on your Cash ISA, including the 0.46% AER (variable) bonus which remains the same." So I was even told my interest was being paid when Plum are are now claiming it wasn't!

Why would a 'pocket' that doesn't earn any interest even exist, unless it was an unfair business practice purely designed to allow a company to pretend they were paying interest when they weren't? And why would a reputable company not mention that a customer was not earning interest on £20,000, even after 16 months? 

My belief is that companies cannot bury unfair terms and practices in the terms and conditions and then say 'gotcha'.

So for the next step should I simply go to the ombudsman?

I do wonder why Plum spat out the Final Response letter so quickly. Do they know something I don't - such as the ombudsman are toothless, or they just swallow everything they are told? A number of things Plum said in their replies were wilfully misleading, including claiming that I 'chose' the Primary Pocket (I did not) and that I did not send in requested information when I did and also that there was a second problem with the account which they claimed they had told me about but they did not tell me about.

The amount they would have to pay me is maybe double the ombudsman fee, so they would need to be pretty confident they would win.

What other options could I consider?

Thanks!

FOS are far from toothless.

masonic

So you opened your cash ISA, transferred money into Plum, but neglected to move it from your primary pocket to the ISA?

It sounds like they even sent you reminders to fund your ISA. The notification of the rate change uses the phrase "on your Cash ISA", meaning only on the funds within it.

The error could have been spotted at any point during the 16 months by logging in and checking the balance of your ISA. They even show you daily accrued interest, which would have been stuck at zero alongside your zero balance. It is an app only product, so you would have access through the app you used to sign up.

The concept of a central holding account is not uncommon. The legislation around ISAs would not permit them to consider this money subscribed to an ISA unless you paid it into the ISA itself.

So I think the reason Plum issued its final response quickly is clear, and it isn't because the FOS is toothless, it's because a fair assessment of your complaint is that it was your error.

clairec666

I haven't used Plum myself - every ISA provider I've used lets you fund directly into the account. Presumably somewhere along the way Plum explained what the "primary pocket" was and that you had to move the funds into the ISA yourself? I imagine a few people will have been caught out by this, but ultimately I imagine the ombudsman would rule in Plum's favour.

masonic

clairec666 said:

I haven't used Plum myself - every ISA provider I've used lets you fund directly into the account. Presumably somewhere along the way Plum explained what the "primary pocket" was and that you had to move the funds into the ISA yourself? I imagine a few people will have been caught out by this, but ultimately I imagine the ombudsman would rule in Plum's favour.

Plum allows you to fund directly into the ISA too. That's how I funded mine earlier this year. However, you need to open the ISA before transferring money. Before the ISA is open you can only select "Primary Pocket", but after you have the choice between "Cash ISA" and "Primary Pocket".

clairec666

Yes, looks like you can fund directly, as this page explains https://help.withplum.com/en/articles/8999048-deposit-to-cash-isa

Presumably the OP didn't realise which pocket they were depositing into, and without screenshots of the transaction will be impossible to prove that Plum misled them into thinking the funds were going to the ISA.

masonic

I've quickly checked the current interface (not that we can say for sure it has always been this way), but when in the main "Pockets" section, selecting add money requires you to make an affirmative choice where it goes (no default option is selected), whereas if you are viewing a particular sub-account (Primary Pocket, or Cash ISA), the destination is locked and the money goes into the sub account you were viewing. This could have been the cause. But it would have been clear after the deposit which sub-account had received the money.

Ed-1

I have to say, the OP wouldn't be the first to be misled by Plum's unclear practices.

I transferred my LISA to Plum to get a certain rate and ended up with a completely different, lower, rate at the end of the transfer as despite saying on the website "...a Plum bonus interest rate of X% AER interest starts accruing when your money reaches Plum", it turns out the rate isn't locked in until the LISA transfer completes - up to 30 days later!

This is stated on their Help website, which I don't recall being asked to read or agree to when I applied for the account. It's not in the T&Cs or Key Features Document.

https://help.withplum.com/en/articles/10585080-lifetime-isa-interest-rate

masonic

Most people complain about the fact interest is paid one month in arrears and the bonus is withheld until the end of the period.

But I agree, if there wasn't anything suggesting the bonus rate applied would be the prevailing one when the first deposit is received that would be misleading - and potentially avoidable by opening with some new money before initiating the transfer. I think I would be challenging them on it if I couldn't find anything in the T&Cs to suggest the bonus wasn't applicable based on account opening rather than first deposit.

(and I think you are correct, they say in the current product information "a Plum bonus interest rate of 1.19% AER interest starts accruing when your money reaches Plum" which wouldn't give them any wiggle room to change it before it starts accruing. Unlike the Cash ISA, this bonus doesn't appear to be variable)

Ed-1

masonic said:

Most people complain about the fact interest is paid one month in arrears and the bonus is withheld until the end of the period.

That's another contradiction. My app says the bonus interest will be paid at the end of the 13th month. That page says at the start.

Stolas

I feel sympathy for the op, Plums app is pretty terrible, and I’ve found it to be needlessly convoluted myself. 

Their wording in app often omits important information or is misleading - such as “Plum Interest” which is described very much like savings account, but is actually a kind of investment account… with lower returns that other easy access accounts?