Cash Savings Platform: Octopus Cash

Author: Anna Bowes
01st March 2019

Octopus Cash currently offers some competitive savings accounts via its platform, which you might want access to. But just what is Octopus Cash and what value can it add to you?

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Background information | What is a platform? | Today's savings market | Who might Octopus be right for? | Application process and customer service | A final word...


Background information

The Octopus Group was founded in 2000 and is based in London. Across all Octopus businesses, the group now has more than 500 employees and 150,000 customers, and its investments have put more than £8.3 billion* into the UK economy (Octopus: 30 June 2018).

Octopus Cash

Octopus Cash is part of the Octopus Group and is a trading name of Octopus Co-lend Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) – registration number 722801.

About the platform?

Octopus Cash is a savings platform. This means that you can split your money between a number of partner providers, therefore keeping your cash more protected – whilst applying and depositing your funds once.

Rather than offering a range of individual accounts from different banks to pick and choose from, Octopus Cash automatically splits your cash (if the deposit is greater than £85,000) between its partner providers, based on what account types you choose, to minimise the risks for those with larger balances and simplify the application process.

If you’re saving £85,000 or less, Octopus will deposit all your cash with the partner bank which pays the best rate on the chosen product. If you are saving more, they will deposit it in chunks of around £85,000, starting with the bank that pays the highest rate and ending with lowest.

Therefore, the rate you are offered depends on the type of product and the amount you are looking to deposit.

The following account types are currently available;

Individuals

  • 12 month bond
  • 35 day notice account

Businesses

  • 6 month bond
  • 12 month bond
  • 18 month bond
  • 24 month bond
  • 35 day notice

There are also accounts available for charities and trusts.

The key benefit is that you can deposit a single lump sum without needing to choose the providers. And on maturity, the money can automatically be rolled over into the best blended rate from the Octopus partner banks.

It is worth noting that your money will be held with the individual banks and building societies that you open accounts with – NOT Octopus Cash – so will be protected by the Financial Services Compensation Scheme (FSCS) or equivalent European scheme that is applicable to that individual provider. Currently the limit is £85,000 per person, per banking licence.

This does mean however that you need to check whether you already hold money with the Octopus partner providers that your money would be allocated to, to ensure you’re not exceeding your FSCS limit. A number of providers share banking licences so make sure you’re covered here, with our full list.

At the moment, Octopus Cash has partnerships with a small number of banks. But they will continue to increase these partnerships and the products available and we’ll keep you up to date with this.

The banks they partner with are Challenger Banks which tend to offer far better rates than the high street providers – but the rates may not be the very best on offer from the open market. The purpose of a platform like Octopus Cash is to offer the simplicity of automatically spreading your cash among a number of providers to mitigate the risks of exceeding the FSCS limit, whilst offering a blended rate that will be far superior to the high street – and doing so year-in, year-out, without having to switch.

As well as private individuals, Octopus Cash is available to businesses, charities and trusts, although the number of partner banks is lower with the latter.

If you are interested in looking at their savings offerings, request an illustration.

You can always check what the very best rates are on the market by looking at our best buy tables.

Today's savings market

As mentioned above, Octopus Cash is not whole of market.

At the moment it has partnerships with seven providers: Metro Bank, Cambridge & Counties Bank, OakNorth Bank, Aldermore Bank, Bank & Clients, Shawbrook Bank and Teachers Building Society. But not all of the providers will offer products for all the Octopus Cash accounts.

For example, for individual savers (as opposed to companies) if you are looking for a 12 month fixed rate bond, only four of the providers will be included. So, if you want to have full FSCS protection on the amount you deposit, you need to keep your deposit to no more than £340,000. Any more than this and the balance with some of the underlying providers would be greater than the £85,000 FSCS protection limit.

But, as mentioned above, rather than choosing from the Banks on the platform, the platform does the work for you – you tell them how much you want to deposit and they’ll tell you what the blended rate would be.

However, if you already have cash with any of the partner banks, you can contact Octopus Cash and they can provide a new illustration and blended rate without them included.

Who might Octopus be right for?

Octopus Cash

If you are looking for a way to deposit a larger sum online, in a simple way, where the following restrictions imposed by this simplification are not a barrier to you, then Octopus Cash could be an option to consider further;

  1. The accounts can only be opened in sole names – no joint accounts I’m afraid.
  2. For individuals – the whole process is done online, although there is a helpline number for those who need assistance.
  3. For businesses, they need to apply for an illustration online or by calling Octopus but if they want to proceed they need to request and complete a paper application via the post.
  4. Remember that as there are only a limited number of banks on the Octopus Cash platform, you need to keep your total deposits under a certain amount if you want all of your cash to be within the FSCS limit. You can of course save more if you wish, but it won’t all be covered.

Please see below examples of some of the returns you can currently expect. Rates will change and the rate on offer will depend on the amount you are looking to deposit, so you’ll need to get a bespoke illustration if you are interested in using Octopus Cash.

Individual Savers

For an individual, on a deposit of £340,000 in the Octopus 12 month fixed term account, the blended rate would be just over 1.63% gross/AER – providing gross interest of £5,567, split between four providers so that all of the deposited funds are around £85,000.

If you were to deposit these funds between the top four 12 month fixed term bonds on the open market – so choosing the very best rates - you could earn a blended rate of 2.09% - producing gross interest of £7,098 – approximately £1,530 more.

But you would need to open and fund four different savings accounts.

So, for those for whom ease of application is more important than earning the very best rate, Octopus Cash could be a solution for you.

Call us on 0800 011 9705 or click here to compare the Octopus Cash solution with what is available on from the whole of the market.

Octopus for Businesses

For those who have little time to spend researching and opening savings accounts for their working capital, the Octopus Cash platform could help and is even better value, but once again there is a pay-off for the simplicity. But by opting for this solution, your business will be earning far more than with your business current account provider. In fact, at the moment, there is no difference in rate between individual and business savings via Octopus Cash.

So, once again there are four providers offering 12 month fixed rate bonds and on a balance of £340,000, the Octopus Cash 12 month business bond will currently produce a return of just over 1.51%, or £5,140 in interest.

On the open market, by opening and funding four 12 month bonds, the return could currently be up to 2.11% - or £7,157. So £2,017 more – but once again, in order to earn this extra interest you will need to open and fund four different savings accounts with four different providers - an even more onerous task for a business.

Other accounts

Octopus Cash also offers both individuals and businesses a 35 day notice account. 

Charities and trusts can also open accounts on the Octopus platform – contact us for more information or take a look at the Octopus Cash website.

Are there any fees? How does Octopus cash make money?

Octopus Cash is payed a fee of between 0.15% and 0.30% by the partner banks, so there are no explicit fees to the customer. The blended rate that you are quoted is the rate you will be paid and therefore you know the interest you will receive.

Application Process and Customer Service

As an individual, you set up an account and apply online, click here.

If you are applying as a business, you will need to set up your account online but download and complete the paper application from the Octopus website.

As Octopus Cash is a platform, you need to set up an account with Octopus only once and then you will be able to view your active products and deposit further funds into new accounts without having to apply again.

Once you have set up your account and requested a product, your identity will be checked electronically – if you fail, Octopus will email you to request additional documentation, which can simply be photographed or scanned on an email to them. You don’t need to arrange for certified copies, which is a real bonus.

Once you have confirmed the account you wish to use, you have one week to fund it in order to guarantee the rate you were advised of.

You can do this by cheque or bank transfer. You can send the whole amount in one go as Octopus Cash will automatically split the money for you, but if your bank will only allow normal electronic transfers within a daily limit, you can email Octopus on [email protected] to explain that you will be sending the money in instalments – although once again remember the funding needs to have been completed within one week of signing up. Alternatively you could ask your bank to make a single CHAPS payment, but you will probably be charged for that.

How is the money allocated?

If you’re saving around £85,000 or less, Octopus will deposit all your cash with the bank which pays the best rate. If you are saving more, they will deposit it in chunks of around £85,000, starting with the bank that pays the highest rate and ending with lowest.

Where is the money kept before it is deposited into the partner banks?

Prior to being deposited with the partner banks, your money will be kept in a segregated HSBC trust account until it is distributed. Octopus says that once they receive your money, they aim to get it working within a week. However, if you are funding your account by cheque, be aware that it will take up to an additional five days for it to clear.

Therefore, there will be a period of time where you could have more than £85,000 deposited with HSBC Bank.

What happens at the end of the term of the fixed rate bond option?

One month before your savings mature, Octopus Cash will get in touch to see if you would like to roll over for another term at the prevailing rate, or if you would like to withdraw. They will also be in touch 14 days before the bond matures.

If you choose to roll-over, your final balance (including interest) will be returned to the segregated HSBC bank account, before being automatically spread out again across the partner banks within a week.

If Octopus does not receive any instruction, your money will go back into the segregated HSBC trust account while they try and confirm what you’d like to do. So be aware that this means you could once again, have more than the FSCS limit with HSBC – and you’ll not be earning any interest!

As it is still early days, your feedback about the customer service you receive from Octopus Cash will be invaluable in helping your fellow savers going forward, so please make sure you let us know about your experiences.

A final word...

Obviously, the best option is to open up the highest-paying accounts available from the whole market, but we understand that some people just don’t want the hassle or have the time.

But, if you’re looking for simplicity when depositing a larger sum into a fixed rate account and you have money sitting in a dreadful high street bank savings account, earning a paltry 0.20% or less - then right now you’ll get a better return with Octopus, so don’t sit back and do nothing, make the switch to a better account.

If you want to compare your Octopus illustration with what you could earn from the whole market, find more details here or feel free to call us on 0800 011 9705.

You might also be interested in reading about another Savings Platform from Raisin UK.

*We are occasionally paid by some providers if you click through from our Best Buy Tables and open a savings or current account with them. We will never accept a payment that compromises in any way our independent, whole of market approach to providing information on savings products. For clarity we will indicate those companies who remunerate us with an asterisk (*).

All rates correct at the date of publication.


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