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Unfamiliar banks woo savers with top rates…is your money safe?

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Written by: Emma Lunn
15/02/2022
If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names luring customers with market-leading rates.

Companies such as Monument, Brown Shipley, Habib Bank Zurich, Bank of Ceylon and JN Bank are proving serious competition for high street banks and building societies.

But why are we seeing all these new brands, who are they, and can you trust them with your cash?

Anna Bowes, co-founder of Savings Champion, said: “Since the introduction on the Funding for Lending Scheme (FLS) in 2012, high street savings providers have become few and far between in the cash savings best buy tables, as the more established providers found a cheap way to borrow money for their lending requirements.

“This gave new providers that were coming to the market an opportunity to woo new customers and we have a seen a plethora of new names over the years.”

The key to knowing your money is safe is checking that these lesser known and newer providers are regulated and authorised by the Financial Conduct Authority and the Prudential Regulation Authority. If they are, up to £85,000 per person, per banking licence, will be protected by the Financial Services Compensation Scheme (FSCS) and therefore just as safe as money with one of the more established names.

Bowes added: “Many of the new names in recent times, such as Brown Shipley, Bank of Ceylon, QIB etc have been brought to the market via the cash platform Raisin UK and, in fact, some of these are only available via the platform.

“But there are also a number of new banks that are available directly to customers – whichever is their route to the market, they often pay higher rates as they are looking to attract new customers and are willing to pay a little more to get to the top of the best buy tables to publicise themselves.”

Here are some of the newcomers:

Monument Bank

Monument is currently leading the way on five-year bonds with a rate of 2.2%.

The bank launched a year ago and says it focuses on the ‘unmet demands’ of more than 4 million wealthy customers, delivering levels of client service that it says are lacking in the premier and private banking market.

Monument is backed by investors after several funding rounds and received its full banking licence in November 2021. This allowed it to enter the savings market and means deposits up to £85,000 are covered by the FSCS,

JN Bank

JN Bank is offering some decent savings rates and is also a relatively new bank.

It became fully authorised by the PRA and regulated by the FCA in December 2019. It launched to the UK market in October 2020.

Brown Shipley

Brown Shipley is currently paying 0.61% on easy access savings via savings platform Raisin.

But far from being a new bank, Brown Shipley has actually been in business since 1810. It’s a private bank with headquarters in London and offices in seven other UK cities, offering fully integrated wealth planning, investment management and banking services.

Bank of Ceylon

Bank of Ceylon (UK) is also offering various savings products via Raisin. These include a table-topping three-year fixed rate at 1.85% and a five-year fixed rate paying 2.05%

Bank of Ceylon (UK) Limited (BOC UK) is a wholly owned subsidiary of Bank of Ceylon, Sri Lanka (BOC) and has one office in the UK.

BOC UK’s business operated as a branch of BOC since 1949 until it was converted into a subsidiary in 2010, and is now authorised by the PRA and regulated by the FCA. Deposits are coved by the FSCS.

Habib Bank Zurich

Habib Bank Zurich’s Fixed Rate eDeposit account currently offers the best-paying 12-month bond at 1.41%.

Habib Bank AG Zurich began operations in the UK in 1974 as a branch of a Swiss bank Habib Bank AG Zurich. In 2016, Habib Bank Zurich plc (a wholly owned UK incorporated subsidiary of Habib Bank AG Zurich Switzerland) took over the operations and business of the UK branch. It’s regulated by the FSCS and deposits are coved by the FSCS.

Islamic banks

The savings best buy tables also include accounts from several Islamic banks such as Bank of London and The Middle East (BLME), QIB (UK), and UBL UK.

Islamic banks operate in compliance with Sharia law. Sharia accounts don’t technically pay interest because lending money to earn interest is forbidden in Islam. Instead, Sharia-compliant savings accounts pay savers an ‘expected profit rate’. This comes out of the profit the bank earns from investing the money. See YourMoney.com’s Sharia Savings guide for more information.

Such accounts are open to non-Muslims as well and sometimes can be the highest paying option for all savers, regardless of their religious beliefs.

To date, no Islamic savings accounts available in the UK have failed to pay the expected profit rate to savers.

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