How Your Money Is Protected

How your money is protected

At Plum, our mission is to help you grow your money for life, and we take that mission seriously. That means making sure that we have robust protections in place for your money.

In the UK, Plum is made up of Plum Fintech Limited and its fully owned subsidiary Saveable Limited, and both entities are regulated by the Financial Conduct Authority (FCA) in the UK. This means Plum is subject to strict regulatory systems and controls requirements.

When we talk about protecting your money, what we mean is if something happens to Plum or one of our partners, such as product providers or banks, you can still get your money and savings back safely. We pick our providers very carefully and will only work with regulated companies who have a proven track record.

Financial Services Compensation Scheme (FSCS) explained

Plum is part of the Financial Services Compensation Scheme (FSCS), which is a government-backed fund that protects available money of eligible customers of firms that have failed and filed for a claim in line with the FSCS guidance.

The FSCS is the UK’s statutory deposit insurance and investor compensation scheme for customers of authorised financial services firms.

The protection is provided by an independent organisation to the customers of firms that are part of the FSCS and who provide investment or savings services. Typically, customers of Plum that had available money and had to claim compensation from the FSCS would be entitled to an amount up to a maximum of £85,000 per eligible person (or up to £170,000 for joint accounts), per bank, building society or credit union.

FSCS does not cover changes to the value of your investments resulting from market forces.

How your investments are protected

The nature of investments means their value can go down as well as up and markets tend to recover and even perform well in the long term. So, just to be clear, your investment is not protected if your investment performs poorly (for example, a stock you invested in has unfortunately started seeing a decline in performance). To read more about investing and volatility, please read here.

But it’s worth being aware about which protections might be available to you in the event that your investment provider, or other regulated intermediary through which you deal, goes out of business.

Plum, and the product partners we work with in relation to your investments, segregate client assets from their own assets. This strict ring fencing of client assets means that a high level of protection is available in the unlikely event of a firm’s insolvency.

If Plum went out of business, as we are covered by the FSCS in relation to investment products, you would be eligible to claim up to £85,000 if there was any shortfall in the assets we held for you, or if you had another claim against us relating to your investments.

💡A shortfall refers to any financial obligation or liability that is greater than the cash on hand required to meet that obligation.

Fund investments

When you invest in a fund using the Plum app (whether for a General Investment Account, Stocks and Shares ISA or Self Invested Personal Pension), you’re buying part of a fund made available to Plum by an FCA-authorised and regulated fund provider. Your investment in a fund (client asset) is segregated from any assets held by the fund provider (their own assets) and the respective regulated custodian. This custodian helps ensure your share of any Plum investment funds are not stolen or lost. As a result, a high level of protection is available in the unlikely event of a firm’s insolvency.

If the appointed custodian or fund provider were to fail, you would benefit from the FSCS. Investments are held within the fund itself, so a high level of protection is already in place in the unlikely event that a fund provider is insolvent.

Stock investments

Your stock investments are safeguarded by a US federally mandated, nonprofit organisation, the Securities Investor Protection Corporation (SIPC).

SIPC ensures that should anything happen to us (Plum) or our investment broker (Alpaca), your investments can be transferred back to you and not touched by anyone who we or our broker may owe money to.

SIPC protection also extends to non-US citizens, covering accounts up to $500,000 per client, as defined by SIPC rules. This makes SIPC coverage similar to the FSCS, which operates here in the UK.

How your money is protected

Plum is regulated by the Financial Conduct Authority (FCA) for holding and controlling client money, but we’re not a bank. This means that in different scenarios your money is protected in different ways, for example client money protection (under the so-called CASS rules) or FSCS protection. Here’s what this means.

The FCA’s Client Asset Sourcebook (CASS) requirements mean that we segregate customer money from our own money. These CASS rules make sure that financial firms securely hold and manage client assets and they involve procedures and standards that aim to protect client funds and assets from loss, theft or misuse by the firm. So, if Plum were to fail, all your money would be returned to you, even if the value was higher than the upper limit of £85,000 from the FSCS.

FSCS protects your money up to the value of £85,000 per financial institution, subject to eligibility. Claims to the FSCS may take up to three months to settle, or longer in the case of an investment. Please note the £85,000 limit applies in aggregate to the total amount of money held by you at any one financial institution, whether it is deposited by Plum, by other providers, or by you directly with the bank. See also above “Financial Services Compensation Scheme (FSCS) explained”.

Let’s look at the various ways different money products are protected with Plum.

Cash ISA

Money saved with Plum in a Cash ISA is held with Citibank and Lloyds Bank, which are both part of the Financial Services Competition Scheme (FSCS).

The FSCS protects up to £85,000 that you have saved, per bank, building society or credit union (or up to £170,000 for joint accounts), subject to eligibility.

If you've got existing savings with any of our banking partners, please note the FSCS caps protection up to £85,000 per person, per financial institution, so you may want to check whether any additional savings with them would mean you exceed the protection limit.

Easy Access Interest Pockets

Money saved with Plum in these Easy Access Interest Pockets is held with Investec Bank Plc, which is part of the Financial Services Competition Scheme (FSCS).

Unlike your Primary Pocket, money saved in an Interest Pocket is therefore protected by FSCS. So in the unlikely event Investec fails, the FSCS would cover up to £85,000 that you have saved.

95 Day Notice Pocket

Money saved with Plum in these 95 Day Notice Pockets is held with Investec Bank Plc, which is part of the Financial Services Competition Scheme (FSCS).

Unlike your Primary Pocket, money saved in this type of Pocket is therefore protected by FSCS. So in the unlikely event Investec fails, the FSCS would cover up to £85,000 that you have saved.

Primary Pockets

Money you deposit in your Primary Pocket is held as e-money (electronic money).

All e-money pockets, including your Primary Pocket, are operated and maintained by our Electronic Money Institution (EMI) provider called Modulr FS Limited, who is obliged to protect your money through ‘Safeguarding’. They do this by placing it into a separate, ring fenced Tier 1 bank account, where it is pooled with money belonging to other Plum and the EMI provider’s customers.

If anything were to happen to our e-money provider, Modulr, an independent insolvency administrator would be appointed to manage the closure of the business and distribute cash held back to customers.

Any money belonging to Plum customers can only be paid out from the pooled, safeguarding account after insolvency costs have been settled.

These safeguarding accounts are also protected by law, so only customers can access the money in them.

Plum Interest

Money in Plum Interest is held in units of a Qualifying Money Market Fund (QMMF).

These units are protected under the FCA’s CASS rules, also known as “Safe Custody” when it comes to assets. These rules mean they are placed into a separate, segregated account away from the fund provider’s own assets or Plum’s own assets.

Therefore, in the unlikely instance where Plum, the fund manager or the custodian (who helps ensure your money is not stolen or lost) that we use goes insolvent, we understand your funds would be returned to you, unless the fund manager or custodian had breached Safe Custody rules fraudulently. In that scenario, qualifying Plum Interest funds would be returned through the provisions of FSCS protection up to the upper limit of £85,000.

That’s because FSCS protections don't just apply to cash deposits, in some circumstances they apply to certain types of investments like QMMFs too. The QMMF that we use for the Plum Interest is subject to strict regulatory requirements so money can be held there and can qualify for FSCS protection.

QMMFs are commonly used by pension providers, insurance funds and other financial institutions to hold large amounts of customers’ cash. Over $6 trillion is held in money market funds in the US and over €1.1 trillion in Europe as of January 2024.

FSCS would not cover a loss that comes from a fall in the market value of the QMMF units. However, this fund invests in short-term assets issued or guaranteed by the UK Government such as government bonds. A loss would occur in the very unlikely circumstance of the UK Government going bust and defaulting on their debt obligations.