Deposit Accounts 600k

[Ken_Code]

OddCat said:

Okay so now they're a cyber attack risk . I'd better ask them what protections they have against asteroid hit while I'm at it

Why are you responding like this when people are just politely explaining to you how risk works?

[LooneyTunes]

1690cc said:

I know little of the world of security etc but I thought HL were quite a large company and therefore would be well resourced in this area. As I understand it you retain FCSC protection at all times as your money moves through their hub and onto the bank providing the end product you are placing it with and as long as you never have more than £85,000 or £170,000 for joint accounts on the move at any one time you are all good.
I use it (and Raisin to a lessor extent) because it was an easy way to split cash savings across multiple accounts and keep below the £85,000 per provider.
Also, over the last 4 years they have generally had rates on offer either matching the best buy elsewhere or within a whisker of it so I wasn't losing out for the convenience.

Is there a way to explain how I am exposed to losing any of my cash savings, please bear in mind that I am a gardener and hence have absolutely zero financial knowledge. (my grass is looking nice though)

Sure.

Without going into fine detail or providing a “how to” guide that explains where/how specific vulnerabilities exist that could be exploited, are three main risks from a cyber/tech/ops perspectives:

1) Your exposure to an institution may be greater than the FSCS limits, either deliberately (to seek higher rates) or because your broader holdings with an institution aren’t known to the aggregator and/or there is cross over with their hub account arrangements. For example, if the DA happened to use the same bank for their hub accounts as you use for other savings, you might be over the limits;
2) Many DA’s don’t open individual accounts for each client. Instead they use custodians/trustees who will retain records of who the beneficial owners are of the funds in each account. That data comes from the aggregator. If it’s wrong, there’s an obvious problem.
3) Cash movement instructions come from the aggregators. There is obviously a problem if these are fraudulently or erroneously made or appear to have been made (either by systems, employees, or third parties).

Depending on how the DA is set up, audit trails may or may not be good. For example, I can think of several ways you could, for example, handle the cash transfers from hub to deposit institution. The cheapest way gives a much weaker audit trail than the most expensive.

Most of the risks related to the above can be managed, but it takes expertise, resource, and a level of organisational and process maturity to do so. Most DA’s are relatively new, small, lightly resourced companies (often loss making too). This is not a great combination, yet DA’s give very little insight into what they do in this regard. For one example, used because their name has come up a few times, go to Raisin’s homepage and you’ll see:

Raisin said:

You're in safe hands

The highest level of security
We use Secure Sockets Layer (SSL) and Transport Layer Security (TLS) technology for server authentication and data encryption, to ensure that your personal data and all communications sent through your Raisin UK Account are 100% safe and secure.

Full deposit protection
Your money is secure at every step. We’re authorised and regulated by the FCA (FRN: 813894), and we only work with banks that are protected by the FSCS (or the European equivalent), so you can deposit, manage and save with absolute confidence. Find out more about FSCS.

None of that really reassures me. For example, look at your browser address bar right now: “https” is SSL/TLS! Pick another (non-banking) website. It’s probably the same… the acronyms probably seem a bit less impressive now.

Look back at the risks I mention and you’ll see that your communication with a DA is only one part of the picture. Their systems and the way they interact with those of others is critical.

Then look at the comment about “(or the European equivalent)”. Yup, there are foreign banks on there where the compensation limits and rules may be different. I don’t know if they make it explicit when placing money that it is not subject to UK protection and the basic fact remains that a major bank, in a large effectively regulated economy, is unlikely to go pop, but remember how UK clients were treated when IceSave did? Would you be happy if your money was in one of the less stable parts of Europe? Some platforms will also deliberately exceed protection limits if you’re seeking the highest returns.

Most clients won’t know much about any of that, and it could be argued that it’s paranoid to want more insight into how operations and security are managed by DA’s but given their pitch revolves around managing sums in excess of normal limits, I don’t think it’s unreasonable for therm to explain more.

It’s also worth being aware that the FCA has highlighted the risk that DA’s pose to financial institutions as a result of their search for the best rates. Sudden large cash inflows/outflows are not always good for deposit taking institutions.

I’m not saying don’t use aggregators, just be aware that they are perhaps not as risk free as they might like to present themselves (and question whether the fees they charge represent value). The key is to do a bit of research and check that you understand and are OK with the risk associated with any bank or platform. When I last looked properly, I couldn’t get comfortable with any of the DAs.

[1690cc]

Thank you for taking the trouble to explain your concerns.

I think even having read your reservations that I remain comfortable using HL for cash saving but YMMV.

[Mr Whippy]

Ken_Code said:

alscar said:

Not sure using Bank account's or NSI would be a good way to " wash " -surely Crypto would have been mentioned ?
Perhaps the OP doesn't like the idea of the Stock Market,has just sold his company and likes the idea of cash where he can see it !

It’s possible, but sticking it all on deposit for several years be an unusual choice.

I know it’s likely all above board, but it’s a very unusual request.

Why what would you do?

You do realise the bell curve distribution of what people will do exists because of the wide range of usual and unusual.

It’s entirely normal to have above board but unusual requests.

The automatic response of calling someone a criminal for not being in the majority is a bit of a weird response.

Chances are people posting on here asking for advice are the outliers… so it stands to reason people asking for unusual help are all criminals?

[OddCat]

Ken_Code said:

OddCat said:

Okay so now they're a cyber attack risk . I'd better ask them what protections they have against asteroid hit while I'm at it

Why are you responding like this when people are just politely explaining to you how risk works?

I know how risk works. I also understand that some risks are miniscule and can be blown out of proportion.

These hubs don't actually have your money. They can't access it. They merely co-ordinate it.

[LooneyTunes]

OddCat said:

These hubs don't actually have your money. They can't access it. They merely co-ordinate it.

To coordinate it, they need the ability to move it/change beneficial interest etc….

[LooneyTunes]

1690cc said:

Thank you for taking the trouble to explain your concerns.

I think even having read your reservations that I remain comfortable using HL for cash saving but YMMV.

HL are quite a bit bigger than most of the aggregators and have much longer track record, likely greater system/process maturity too.

I’d probably be more comfortable with the risk, but less keen on the fees.

[bitchstewie]

I'm not sure I see there being a risk of you actually losing your money permanently with the aggregators but I must admit when I looked at them a few people spelled out that it isn't too hard to see a scenario where you may not be able to access it as quickly as you'd like if you were putting your near term cash savings with them.

[LooneyTunes]

bhstewie said:

I'm not sure I see there being a risk of you actually losing your money permanently with the aggregators but I must admit when I looked at them a few people spelled out that it isn't too hard to see a scenario where you may not be able to access it as quickly as you'd like if you were putting your near term cash savings with them.

Gain access to the ability to redirect funds from individuals with large deposit bases and with a bit of planning you’d potentially have it in a less cooperative jurisdiction before people noticed… obviously everyone takes their own view, and there’s nothing wrong with that if they’re going into it with their eyes open.

You’re right that in an insolvency situation (either aggregator or bank) you’d be looking at longer to recover than depositing directly.