Last week, Marcus from Goldman Sachs made a shock announcement that it was withdrawing its hugely popular, often market leading, Online Savings Account. The reason behind this surprise decision was that it has too much cash from savers.
Since its launch in September 2018, the bank says that it has attracted 500,000 customers with more than £21bn deposited – which has catapulted it into being considered a larger bank and therefore potentially subject to British financial rules which in turn means additional regulation. Once the assets reach £25bn, there would be a need for the bank to ring-fence its retail banking services from the rest of their business – all of which would mean additional costs and administration for the bank, which they clearly want to avoid at this time.
Marcus has said that this pause in accepting new applications for the easy access account is temporary – and means that it can continue to offer a competitive interest rate to those who did manage to open the account, whilst considering how to proceed going forward.
For those of you that didn’t manage to open the account, all is not lost. As we have reported recently, there is a surprise white-knight still perched at the top of the best buy table, National Savings & Investments (NS&I).
In fact NS&I is now taking up the top two spots in our easy access best buy table with its Income Bonds account paying a monthly gross interest rate of 1.15% - and the Direct Saver paying 1% gross/AER. You can deposit up to £1m in the former and £2m into the latter – and all funds are protected by HM Treasury – making these accounts particularly attractive for those with large cash holdings, as they won’t need to spread their money among many difference providers to keep within the Financial Service Compensation Scheme (FSCS) limits and ultimately keep all their cash safe
Marcus had been a stalwart in the easy access best buy tables since launch and had even helped to boost the rates on offer from other providers as they had to compete harder for savers cash, and so the phrase the ‘Marcus effect’ was coined. Sadly, the Marcus affect is now causing rates to go in the opposite direction as more rates have fallen and accounts have been pulled since Marcus withdrew from the market. As we have mentioned in previous articles, how long NS&I will be able to hold their rates at market leading levels remains to be seen, so snap up what you can while you can.
For those of you looking outside cash, especially while rates are so low, you may value speaking to a chartered, independent financial planner at our sister company, The Private Office. Why not take a look and see what they can offer and of course please feel free to contact us if you have any questions at all as we’re always happy to help where we can.