What is a savings platform, and should you sign up?
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.
Aviva has launched its own savings platform called Aviva Save. It is powered by Raisin and so far has savings accounts from three UK banks. Aviva Save doesn't charge savers to use the platform, instead it takes payments from the banks listing on the platform. As a result interest rates offered are currently the same or lower than those available directly from the listed banks.
Savvy savers can also get bonus 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 welcome bonus of up to £50 when you open and fund an account through the Raisin UK platform. You must meet some minimum deposit and balance requirements to be eligible for a bonus. Those opening an easy access account must have a minimum balance of £5,000 or more for the first six months from opening the account. If you open a fixed term account, the minimum opening balance must be £5,000 or more. Only one bonus is available per person. This information is correct at time of writing and savers should check directly with the platform before making any decision to open and fund an account.
Savers opening and depositing money into an account through the Raisin UK platform can earn a welcome bonus. Eligibility requirements apply. See the latest rates on the Raisin site.
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, but the saver does not have a direct relationship with the bank or building society. Savers need to make sure they don’t hold more than £85,000 in direct holdings and any trust-based savings held with the same bank.
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 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.
Where the funds are held in trust by the savings platform, rather than being passed on to the bank or building society, it can mean that should the bank go bust, and the funds need to be claimed back from the Financial Services Compensation Scheme, there can be a delay of up to three months in getting the funds returned. Where the funds are held direct with the bank or building society, it is only a wait of up to seven days.
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.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.