What is a savings platform, and should you sign up? | moneyfacts.co.uk

Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 09/10/2020

Savings platforms bring together selected savings accounts of many banks and building societies into one place, where savers can then select which ones they want to invest in. These platforms usually only ask savers for their personal and bank details once, removing the need for multiple applications. The savings accounts listed within the savings platforms also offer protection of funds up to £85,000 per individual. However, savers still need to check that individual brands are not sharing the same banking licence, for example with Saga using the banking licence as Marcus by Goldman Sachs.


Our guide to the depositor protection scheme has a list of different brands and banking licences.


There is the hope that the convenience of savings platforms, that are also being dubbed ‘savings supermarkets’ will act to encourage more savers to actively manage their savings accounts and achieve better interest rates. This includes being able to reinvest maturing funds quickly and easily in an account with the same or with another savings provider in the platform. Savers that don’t reinvest their maturing funds may find that these are either returned to their nominated bank account or are held in a holding account belonging to the savings platform.


This is where a few of the downsides of savings platforms come to light. Savers’ money is likely to go into the holding account of the savings platform when they deposit new funds into the platform and between maturities as they move funds from one savings provider to another. The holding accounts are usually bank accounts held in trust on behalf of the savings platform. This means that the savings platform does not have ownership of these funds and these remain the property of each saver. Funds are held in a holding account for a period of hours or a few days and during this time there is the exposure that savers may have funds over £85,000 if they also save directly with the bank that operates the holding account.


The use of trusts to manage funds in this way requires careful legal management and scrutiny as highlighted by the recent collapse of the card firm Wirecard. The Financial Conduct Authority had suspended all activity of the firm for nearly a week while they checked that the funds held in trust had been managed appropriately and remained available.


The range of savings accounts available in savings platforms is also limited when compared to what is available via the open market. Savers can easily compare those accounts available in a platform versus the whole of market using our savings accounts tables.


Savers will also need to refer to each individual platform for minimum investment requirements. For example, Active Savings from Hargreaves Lansdown uses the minimum balances of each individual savings account while Flagstone has a minimum of £250,000 to open an account.


The most recent entrant to the savings platform market is Youinvest from AJ Bell which is using the services of established savings platform Raisin UK to power their platform. Other savings platforms include Active Savings from Hargreaves Lansdown, Raisin UK, Dynamic Cash Management Express (DCME) and Flagstone.

Which savings platform delivers the best rates?

We have reviewed the best rates publicly available across these savings platforms and compared those available in the wider market.

 

Term

Open Market Best Rate

Youinvest

Raisin UK

Flagstone

DCME

Active Savings

One-year fixed rate

1.31% (expected profit rate)

0.81%

1.10%

1.20%

1.12%

1.20%

Two-year fixed rate

1.37%

0.90%

1.08%

1.30%

1.12%

1.10%

Easy access

0.96%*

Not available

Not available

0.85%

0.45%

0.96%

Source: Moneyfacts.co.uk *Best rate available when NS&I Income Bonds excluded due to rate reduction next month, account has a limit on the maximum number of withdrawals.


The very best savings rates continue to be available on the open market outside of savings platforms. The best rates for one- and two-year fixed rate bonds remain more competitive in the open market, with only one platform matching the best easy access rate available.

How to earn an interest bonus with a savings platform

Savvy savers can also getbonus payments when they sign up to a savings platform and boost their returns. For example, Active Savings offers a scale bonus starting at £10 cashback for balances of £10,000 to £19,999 and a maximum of £100 for balances over £80,000. Raisin UK offer a similar cashback scheme with those saving between £5,000 and £9,999 eligible for a £5 payment, increasing to £50 for balances of between £75,000 to £85,000. Plus existing Raisin customers can also refer their friends to join the platform and earn a further £25 for every friend depositing £25,000 or more into the Raising platform.

What are the higher interest alternatives?

Those wanting to get the very best rates will need to take a longer-term fixed rate bond. Currently the best seven or five-year fixed rate bond is from the Bank of London and Middle East (BLME) offering 1.60% expected profit rate. The bank also offers a four-year fixed rate bond with an expected profit rate of 1.50%.

The top rate for a two-year fixed rate bond is from Al Rayan Bank with an expected profit rate of 1.37%.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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