Paying interest on cash balances

The interest rate will be variable and based on the amount of interest we earn on cash. We’ll retain the first 1% and share all remaining interest with you 50/50. At present, we expect the rate payable to you to be in excess of 1.5%, although this is dependent on market rates at the time.

Should interest rates rise, we expect to generate more interest and you’ll therefore earn more.

You’ll receive a monthly interest payment which will be credited to your account.

Interest payments will normally be paid on, or around, the tenth working day of the month.

This varies depending on the product type. Interest will be paid gross of income tax on all SIPP, ISA and offshore bond accounts. However, for Modular GIA and Wrap Investment Portfolio accounts, interest will be paid net of income tax, with the exception of corporate, charity and pension trust accounts, which receive interest gross.

Interest will be paid monthly in arrears.

We’re retaining the first 1% of interest earned on cash holdings to continue to invest in the platform and keep our charges as low as possible.

If you close your James Hay product, no further interest will be added to your account after the last monthly payment date before the closure of your account.

We actively manage the cash that our customers hold in our products.

We do this so we can maximise the interest the cash earns for you and minimise any concentration risk of the cash being held with a single bank.

We pool customer cash and diversify it across a panel of banks that ultimately hold the deposits – our panel currently comprises 16 banks, but we’re currently using 9 to hold deposits, and who we use varies by product.

This not only delivers traditional diversification protection, but it also improves the Financial Services Compensation Scheme (FSCS) protection available, as all the banks are regulated, which means you are covered for up to £85,000 in the event any of the banks on our panel fails.

• By spreading deposits over multiple banks, this means you’re protected under the FSCS for up to £85,000 at each bank – the level of protection depends on how we’ve allocated the cash across the panel and the level of any independent cash holdings you hold with these banks.

We continually monitor strict criteria for the banks on our panel, to make sure they continue to qualify.

• Each bank must:
  • have a UK banking licence
  • be authorised by the Prudential Regulation Authority
  • be regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

• They must also be rated at least category ‘BBB’ or higher by one or more of the leading credit agencies Fitch, Moody’s or Standard & Poor’s. All 16 banks currently on our panel are at least ‘A’ rated.

• As well as credit ratings, our due diligence covers several metrics which are a combination of quantitative metrics, derived from financial statements, and qualitive metrics gained from media monitoring and service reviews. We also consider the environmental, social and governance (ESG) credentials of the banks we select.

• While we use longer term deposit products to gain a better interest rate, we perform daily liquidity monitoring which, coupled with cashflow modelling, helps ensure we have sufficient cashflow to meet your needs.

• When we use these longer-term deposits, we don’t deposit more than 50% of the available cash with a single bank. This varies by product/platform but ensures a minimum diversification to at least two banks, but typically it will be more.

Yes. We only deposit customer cash with banks which are authorised by the Prudential Regulation Authority, regulated by the Financial Conduct Authority and Prudential Regulation Authority, and are covered by the Financial Services Compensation Scheme (FSCS).

By spreading deposits over multiple banks, you’re protected under the FSCS for up to £85,000 at each bank – the level of protection depends on how we’ve allocated the cash across the panel and the level of any independent cash holdings you hold with these banks.

Yes, it applies across all your James Hay products.

Yes. If you have a financial adviser, we’ve already shared a copy of this letter with them.