As an existing client of Dynamic Cash Management, we hope that you are already familiar with our unique relationship-based approach to providing cash management services.
As a DCM client, we can provide you with online access to view your cash savings accounts via our CLIENT PORTAL. The portal will provide you with a clear picture of your cash position which you can access anytime, anywhere.
FREQUENTLY ASKED QUESTIONS
We have highlighted some frequently asked questions should you have any initial questions regarding your cash management services. If you would like further information on a different aspect of cash management, please get in touch with the New Business Team and they will be happy to speak with you about any queries you might have.
Who provides the DCM service?
DCM is provided by Gale and Phillipson. The service was launched in 2010 and has quickly developed a reputation as an innovative and market leading solution for cash.
Will I get any benefits from demutualisation of Building Societies? Do you allow for this in deciding which accounts to invest in?
Most Building Societies expect new customers to sign away any potential demutualisation payments. Where this is not the case, you would get any benefits. If we felt that such benefits were likely to be significant and were available for new accounts, we would take them into account.
How do I know what interest rate I am getting at any particular time?
Your statement shows you the current interest rate on each account. It also shows interest payments you have received.
Will you limit the amount placed with any one institution to the FSCS limit for each individual to ensure full protection by the UK FSCS?
In general, we do not limit the amount placed with any one institution to the amount covered by the relevant compensation scheme. In providing DCM, we are aiming to provide a balance between getting competitive returns whilst managing the risk to which the deposits are exposed, all subject to an overall acceptable level of administration.
If we were to limit the amount placed with any institution to the amount covered by the relevant compensation scheme, this leads to a reduction in the average rate we are able to achieve (since we have to use more accounts) plus an increase in the administration effort required to manage that number of accounts.
As a result we believe the combination of the fee we would have to charge given the additional administration effort, together with the lower average rate achievable would result in the overall proposition being a lot less attractive to clients. For example, if we were investing £1m for a single client, we would need to open extra accounts with different institutions in order to ensure all balances were covered by the FSCS scheme. This could mean a reduction on the average rate we are able to achieve for that client.
The approach that we take instead is to ensure that money is only placed with institutions that we believe to be secure. We believe that the combination of screening which institutions are used based on each client’s attitude to risk, together with a regular review process to identify and respond to any weakening in the credit ratings of the institutions we use significantly reduces the risk of any losses through depositing sums greater than the cover provided by compensation schemes, and achieves an acceptable balance between risk and reward for each client.
Once we have decided on the number of accounts to be used, we then manage any exposure to individual institutions. As part of this, we take into account the fact that many banks are part of the same group and are covered by the same compensation scheme limit (eg AA and Birmingham Midshires are part of the same group and any deposits with those organisations will be combined and subject to the single FSCS limit for each investor).
Having said all of this, for joint applicants depositing between £100k and £500k, we frequently achieve close to 100% of deposits being covered by the relevant compensation schemes since joint accounts generally get twice the level of cover.
How can I trust DCM with my money?
In using the DCM service, you are simply requesting that we administer money on your behalf. The cash is held in your name with banks and building societies that we have selected for you. We as a firm are not the custodians of your money, the institutions we pass your money to are. However, our company has a strong history and reputation of employing professionals, this coupled with robust systems and controls to protect you, so your money is doubly secure because of the systems and controls of the banks and building societies themselves.
It is also worth remembering that although this particular service is not regulated by the Financial Conduct Authority, the provider of DCM, Gale and Phillipson itself is regulated by the FCA.
There is a separate information sheet ‘Fraud Q&A’ to fully address this question.
How do you monitor the “security” of the banks with whom you deposit the money?
We have produced a separate information document called DCM Due Diligence for clients. More information on this can be found in the ‘Which Institutions are used in Dynamic Cash Management?’ section. Please refer to this document to thoroughly answer this question.
How do I know you won’t invest my cash in high risk investment products?
With DCM we only invest in cash deposit accounts provided by banks, building societies and National Savings products.
We do not use investment funds, nor do we purchase shares etc. This means that the value of your deposit will not fluctuate based on market conditions.
Will you allow for money I already have in bank and building society accounts when selecting accounts for me?
Yes, providing you tell us about any money you already have in different banks and building societies, when we look at how much Financial Services Compensation Scheme (FSCS) protection you will benefit from, we take that into account. This means that we will sometimes choose a different institution for you so that you get an extra slice of FSCS protection and so that you don’t have too much money with one institution.
Who is eligible to claim under the FSCS?
Not all depositors are eligible to claim under the FSCS. The FSCS cover individuals, small companies and small charities.
If you are unsure if you, your company or charity are eligible please contact our office.
What is FSCS?
FSCS stands for Financial Services Compensation Scheme.
The Financial Services Compensation Scheme (FSCS) is the UK’s statutory compensation scheme for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it.
FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA), and is funded by a levy imposed on authorised financial services firms. The scheme covers deposits, insurance policies, insurance brokering, investments, mortgages and mortgage arrangement
For example if a bank fails, an eligible depositor is entitled to claim up to £75,000 under the FSCS.
If your money is in a joint account held by two eligible depositors, each of you can claim up to £75,000 (making a total of £150,000).
Did DCM clients lose out from the failure of Icelandic banks?
The DCM service was not on offer at the time. We do believe that our procedures are robust enough to withstand any extreme events like that of the failure of Icelandic banks to ensure minimal impact to our clients.
By splitting clients’ money between accounts, the impact of any individual bank failing is reduced. The people who suffered worst from the Icelandic banking failures were people who had all their savings with one bank.
Part of our review process for institutions involves analysing the data from rating agencies. The rating agencies were however very late in recognising issues with the Icelandic banks. and this route would not have identified all the problems quickly enough for us to remove all clients’ money.
The rating agencies were criticised at the time for not downgrading the Icelandic banks sooner. We believe that their procedures have improved to make it more likely that they would provide adequate warning in future.
We also review press comment as part of our review process for institutions, and there was significant adverse UK press comment concerning Icelandic banks before the rating agencies indicated that there were problems. In fact, one of the architects of DCM had substantial sums invested in Iceland which he successfully removed before the banking failures as a result of UK press comment.
Overall, with a combination of improved rating agency procedures and press comment, we therefore believe that in similar circumstances, we would recognise problems soon enough to remove our clients’ money in time to avoid loss.
How quickly can I get my money out?
This question is answered more thoroughly in the DCM Service Description.
In general, for instant access accounts, we will often be able to get money to you in a few days. For other accounts, you may be able to get your money out very quickly but may lose interest if you do so. For genuine term accounts, where you get better interest, the money will be tied up until the end of the term.
It is important that you describe your needs carefully at the outset so that we open suitable accounts for you.
The DCM service does not impose any extra restrictions on when you can get your money out – the only limits are how long it actually takes money to be paid into the Hub account and then to you.
Will statements tell me which Banks my money is with?
Yes, and they also say who the money has been invested with previously.
How can I see my balance?
We automatically produce a statement for you every six months. You can also request an ad hoc statement by phone, email or post. We also offer our DCM clients access to our online portal which will enable you to securely view your DCM balance and structure at any time.
How do I instruct a withdrawal?
You may call, email or fax your dedicated Client Manager. However, should they be unavailable, one of the team would be very happy to assist you on:
Telephone: 0345 094 2255
Fax: 01748 825 498
Will you tell me whenever you get any post in respect of my accounts?
No! Lots of it is junk mail. We aim to keep your administration to a minimum. We will tell you when there is news you need to know.
Also, we will sometimes act on the information ourselves – for example, if the news is that the interest rate is about to fall on the account you have, we may be able to swap your cash to a more competitive account.
In addition, despite seeking to ensure the administrative burden upon you is kept to a minimum, there will be times when the underlying institutions will send correspondence directly to you. For these circumstances, we will provide you with a number of pre-paid envelopes so that you can simply forward straight to us to manage and action accordingly on your behalf.
How often am I likely to need to help with transactions?
This depends on how much you invest and how much financial conditions change. Overall, it might be once every few months.
How often will you move money between accounts?
Your accounts will be reviewed upon maturity of a fixed rate, or every 2-3 months in the case of instant access or notice accounts. Upon the review, we will move your money should the interest rate have dropped to an uncompetitive level on an account, or when our assessment of the financial strength of an institution no longer meets your requirements. We also monitor the strength of the institutions between reviews, and should our assessment of an institution show it to have fallen to an unacceptable level, we would act to move those funds to a more appropriate account, regardless of your review date.
I’m not a UK resident. Can I still sign up for DCM?
No, the accounts we use generally require you to be resident in the UK. We therefore do not currently offer DCM to non-residents.
Can DCM be used to manage cash in trusts?
No. DCM does not currently offer DCM to Trusts. This is because of the very limited offering of accounts on the market, which makes it impossible to provide competitive accounts.
Can DCM be used to manage cash held under a Power of Attorney for a UK resident?
Yes, although not all bank and building societies will open accounts for cash held under a Power of Attorney so the selection of accounts to invest in is lower and the average interest rate we achieve may be slightly lower.
Can DCM be used to manage cash held by charities?
Yes. DCM can be operated for charities however there are a limited number of institutions which offer charity accounts and hence the rates available through DCM may be lower than for personal cash.
Can DCM be used to manage cash held in companies?
Yes. DCM can be operated for companies however there are a limited number of institutions which offer company accounts and hence the rates available through DCM may be lower than for personal cash.
Can DCM be used to manage cash held in my name?
Yes, DCM can be set up in single or joint names for personal clients.
Why isn’t the fee reduced for larger investments? It doesn’t seem fair to make the same % charge for small and large investments.
We do, the DCM fee is tiered for balances over £5million.
We do not reduce the fee below this level as larger investments include greater work and involvement from us in setting up more accounts, so that your money is spread between different institutions.
For larger investments we’ll swap your money more often since with larger investments even a small difference in interest rates makes swapping accounts worthwhile. Therefore there is an increased work load when dealing with larger investments.
Overall, our analysis shows that the charge imposed for both smaller and larger investments is a fair reflection of the work involved.
How many accounts will you set up for me? Is this likely to affect my credit rating?
The number of accounts we set up for you will depend on how much you invest in DCM. It is likely to be between 2 or 3 for smaller investments (eg close to the minimum of £100,000) and 6-8 for larger investments (eg over £5m).
It should not affect your credit rating as the accounts are all savings accounts rather than loans.
Do you use Premium Bonds within DCM?
No. The current administrative requirements to invest in them make them unattractive. The effective interest rate given on Premium Bonds is also currently lower than available on many other accounts and variable as it depends on luck.
I already have some money invested in a savings account which I want to keep there at the moment. Can this still be included within the DCM service?
Yes. We would help you to do this. If it becomes part of DCM, we’d include it in our fee calculation. You’d benefit from us reviewing when to switch to a new savings account (eg if better terms were available elsewhere).
Alternatively if you are happy with the current rate on the account, you could keep the money in that account until there is either a rate reduction and switch the cash to DCM later. Again we would help you do this.
What is a Hub Account and why do you need to open a Hub Account for me?
For us to manage your cash and open multiple personal savings accounts for you, you need a separate account in your own name which is named on your savings accounts. This is also sometimes known as a linked account.
The linked account must be one we can monitor that is separate to your everyday current account. For your convenience we open an account for you for this purpose. We call this your Hub Account.
A Hub Account is simply a bank account in your name, which is used to facilitate moving cash around your savings accounts and to receive interest paid from these savings accounts.
When opening a new savings account the provider may ask for a cheque or electronic bank transfer, by using your Hub Account we can do this for you to reduce the amount of work to you in.
Can DCM be used to manage my cash ISAs?
No, we don’t offer DCM for ISA investments due to restrictions that are imposed in moving money.
Why do you need so much information about me and my money?
To legally open accounts in your name, lots of information is needed. This is a requirement imposed by the government to help combat the financing of terrorism and money laundering.
Using DCM you provide this information once and we then deal with the process of opening the various accounts in which your money is invested. If you try to manage the money yourself, you will have to provide this information (or a variation of it) each time you open a new account.
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