What does ‘your money is protected by the Financial Services Compensation Scheme (FSCS)’ mean and is my money safe?
NuWealth, formerly known as Wombat Invest, and our carefully selected partners, are regulated and authorised in the UK by the FCA, which means money you deposit into our accounts is either covered by the financial Services Compensation Scheme (FSCS), or safeguarded under the FCA’s Electronic Money Regulations. FSCS protects you if the financial firm you’ve used has failed and can’t pay your claim and covers eligible deposits up to £85,000 per person, per banking group. Read more information on FSCS here.
For all our savings accounts, we are partnered with Bondsmith (our payment facilitator) and GB Bank (our partner bank that is fully FSCS protected): https://gbbank.co.uk/ Their FSCS policy is listed here: https://gbbank.co.uk/fscs-protection/
Bondsmith is an electronic money institution (EMI) that facilitates the transactions between you, our client, and GB Bank, who holds your money on our behalf. As Bondsmith is an FCA approved EMI, all monies are held in a separate safeguarding bank account with HSBC and then transferred to GB Bank no later than the end of the next banking day, at which point the FSCS deposit guarantee cover applies. EMIs cannot be FSCS protected as they are not banks, however, funds will be safeguarded (i.e., protected) in accordance with the FCA’s e-money rules. Protected Money is not covered under the FSCS but would be reclaimable in the event of insolvency under the FCA’s Electronic Money Regulations(EMR). More information on e-money rules can be found here.
When you make a deposit to your NuWealth saving’s account, this is your deposit’s journey:
Your bank (FSCS protected) -> Bondsmith’s e-wallet (FCA EMR protected) -> Bondsmith’s HSBC holding account (FSCS protected) -> Your NuWealth savings account under GB Bank (FSCS protected)While your money is in GB Bank, it is held by Bondsmith Savings Nominees Ltd as trustee and protected by the FSCS up to £85,000, if you are eligible. Read more about the FSCS and their eligibility rules here
While your funds are in transit to and from GB Bank, they are briefly held by Bondsmith Savings Ltd as electronic money. Electronic money is safeguarded but not FSCS protected. Read more about safeguarding and how electronic money is protected here