Yes, your money is kept safe at all times by a process called safeguarding.
But what does that mean? And how does it differ from other protection methods that banks and building societies use like FSCS protection?
You may have heard terms like safeguarding and FSCS protection before, and we know that understanding how your money is protected can sometimes feel a little confusing, so we've written this handy article to explain it in more detail.
FSCS Protection
The Financial Services Compensation Scheme (FSCS) is a protection scheme that applies to deposits held with UK banks, building societies and credit unions.
Because banks and building societies use customer deposits to make investments, and offer things like loans and mortgages, if they were to fail, there's a chance that they won't have enough money to cover the amount that customers hold in their accounts. FSCS protection exists as a safety net to ensure that in those situations, customers get their money back (up to the protected amount of £120,000).
Safeguarding
Because Algbra is an authorised Electronic Money Institution (EMI) and not a bank, your money isn't protected under FSCS. Instead, it’s protected through a separate regulatory requirement called safeguarding.
Safeguarding means that institutions like Algbra need to keep your deposits separate to our own funds. We can't use your money for things like lending or investing like banks do, and we have regular external audits to make sure that we're safeguarding funds correctly, keeping them in designated safeguarding accounts with authorised banks.
If an EMI fails, the safeguarded money is used to return funds to customers. Unlike FSCS protection, there's no upper limit as we're required to keep all customer funds safeguarded. Some safeguarded funds might be used to cover the administrative cost of returning money to customers if the business didn't have enough money to cover this.
Where things might differ
Some Algbra products may have different protections. For example, if money is placed with a partner bank as an eligible deposit, FSCS protection may apply through that bank. Where this applies, we’ll always explain it clearly before you use the product.
The main thing to know
The money in your Algbra account is safe. It’s kept separate, protected under the safeguarding rules, and not used to fund harmful industries, interest-based lending, or speculative activity. And in the unlikely event that Algbra was to fail, you’d get your money back.
Money protection can sound complicated, but it shouldn’t feel confusing. We’ll always aim to explain it in plain English, and if you ever have any questions about it, our support team are on hand to help.