Investment planning; Consumer warning on Binance Markets Ltd and group

 Contents:

• NS&I green savings bonds
• Consumer warning on Binance Markets Limited and the Binance Group

NS&I green savings bonds

(AF4, FA7, LP2, RO2)

NS&I has confirmed that it will launch new Green Savings Bonds later this year.

Since slashing its rates last September and then poorly handling the flood of withdrawals, NS&I has kept a low profile. Whereas its financing remit for 2021/21 was £20.0bn (exceeded by £3.8bn), the 2021/22 remit was reduced to £6.0bn in the March Budget. That same Budget contained a largely forgotten announcement that: ‘The government will offer a green retail savings product through NS&I in the summer of 2021. This product will be closely linked to the UK’s sovereign green bond framework and will give all UK savers the opportunity to take part in the collective effort to tackle climate change, benefiting from the innovative reporting standards planned for the green gilt programme.’

On 30 June, the Government’s Debt Management Office (DMO) published a paper setting out the ‘UK Government Green Financing Framework’, ahead of the issue of the first ‘Green Gilt’ in September. A day later, NS&I released details of its new Green Savings Bonds (GSBs), which will ‘be available later this year’. Unfortunately, the most interesting detail – the interest rate – is missing, but NS&I lists the GSB’s key features as:

• 3-year fixed term.
• Designed to be held for the whole term, but with a cooling-off period in the first 30 days of investment.
• Available to savers aged 16 and over.
• Available to buy and manage online only.
• Minimum investment of £100 and maximum of £100,000 per person, which can be made individually or jointly.
• Investors must have a UK bank account capable of receiving BACS payments.
• Fixed rate is guaranteed for the whole term. Interest is earned daily and added once a year on the investment's anniversary and paid on maturity. In other words, this is not an income product.
• Interest is earned without deducting any tax at source, but is taxable.

If this sounds vaguely familiar, then you are probably thinking of the election sweetener that was George Osborne’s Pensioner Bond, aka 65+ Guaranteed Growth Bonds. Those bonds had market-topping interest rates, which may not be what the Treasury is planning this time around. At present, three-year gilts have a redemption yield of less than 0.2% and the reinvestment rate NS&I offers for maturing three-year Guaranteed Growth Bonds is 0.4%. The best rate on offer in the retail market for a three-year fixed rate deposit is 1.3%.

Among the details that NSI did not report was any planned size of the GSB issue. That hints at a disappointing rate, as anything that was near market leading would almost certainly mean the £6bn net fund-raising remit for 2021/22 would be exceeded. So far, the DMO has not announced any revision to that figure. 

Consumer warning on Binance Markets Limited and the Binance Group

(AF4, FA7, LP2, RO2)

The Financial Conduct Authority (FCA) has ruled that Binance Markets Limited is not permitted to undertake any regulated activity in the UK without prior consent of the FCA.

Binance Markets Limited is an affiliate firm based in London and is part of a wider Group (Binance Group) which is currently based in the Cayman Islands. The firm has multiple entities around the world. No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.

The FCA does not regulate cryptocurrencies, but requires exchanges to register with them. With that in mind, Binance has not registered with the FCA and as a result is not allowed to operate an exchange in the UK.

The Binance Group said the FCA notice would have no "direct impact" on the services it provides from its website Binance.com.

Binance's existing crypto exchange is not UK-based so despite the FCA ruling, there will be no impact on UK residents who use the website to purchase and sell cryptocurrencies.

Given the risks involved, the FCA has been warning consumers to be wary of adverts relating to investment in cryptoassets.

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