New Octopus Cash account gives savers up to three times more FSCS cover than a typical bank account.
Octopus, the fund management firm with over £6bn in assets, has launched a new savings product in collaboration with a handful of challenger banks. Spun out of Octopus Labs, the firm’s fintech incubator, Octopus Cash uses technology to automatically spread cash across three different challenger banks.
In this way, savers get access to triple the level of state-backed FSCS protection, all from a single bank account. The FSCS (financial services compensation scheme) is designed to make savers whole in the event of their bank or building society falling over. The scheme covers savers for up to £85k of savings per bank. The level of coverage provided by the scheme has just been raised from £75k by the Prudential Regulation Authority. But with Octopus Cash, up to £255k can be sheltered within the scheme, without the hassle of having to manage multiple bank accounts.
The firm has named challenger banks Cambridge & Counties and OakNorth Bank as two of its partners.
An active player in the fintech space, Octopus launched a peer-to-peer offering by the name of Octopus Choice in April of last year. The platform received full authorisation from the FCA in January, making it eligible to launch an innovative finance ISA offering.
The newly launched Octopus Cash is a one year, fixed term account with an interest rate of more than 1 per cent. The big five high street banks offered an average one year savings rate of 0.55 per cent in January. Savers will have to deposit a minimum of £50k to use the product.
“The UK’s savers have £145bn squirrelled away in fixed-term deposits. However, faced with the hassle of switching, fewer than one in ten of us choose to move it at the end of the term,” said Sam Handfield-Jones of Octopus Cash, citing an FCA report. “But in today’s times of low interest rates and rising inflation, finding an easy way to get the best rate has never been more important. That’s why we created Octopus Cash: a simple, efficient and tech-enabled product that could let savers double their interest rate and triple their savings protection – with a third of the hassle.”