With Coconut, your funds are held in a segregated account in Barclays, protected under the FCA's safeguarding rules.
If you deposit your money in a traditional bank account, your bank can lend out your money to other customers and it means that the funds are at risk. Because of this, the banks pay into an insurance scheme called Financial Services Compensation Scheme which guarantees up to £85,000 in the event that the bank finds itself unable to pay back your deposits.
We come under the FCA's e-money rules and your deposits with Coconut aren't lent out or put at risk by us, so they aren't covered by the FSCS. They are held in a safeguarded Barclays account and there are strong restrictions on what Barclays can do with the funds. In the unlikely event that Coconut or our payments provider PPS, which is owned by Mastercard, went out of business, your money is only accessible by you.