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FundsNetwork acts to keep rate positive

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Leah Milner
Fidelity FundsNetwork is to increase the interest rate of its cash account but some other platforms will not confirm what will happen to their rates if the base rate drops towards zero.

Most platforms' cash accounts track well below bank rate and so if this fell towards zero, it could mean the client paying to hold money.

But FundsNetwork says that from January 19, for six months, its rate will track at 0.2 per cent above bank rate rather than its usual rate of 0.4 per cent below.

Axa Elevate's rate tracks below bank rate by between 0.3 and 0.65 per cent. A spokeswoman says: "We are currently working on the mechanics of how it would work at a platform level if the Bank of England drops the rate to 0 per cent."

Novia's cash account with HSBC tracks at bank rate minus 0.25 per cent. Chief executive Bill Vasilieff says if the bank rate dropped to zero, Novia would have to negotiate with the bank and policy would depend on its response.

Transact spreads clients' cash across four different banks and pays below bank rate. Sales and marketing director Malcolm Murray says: "I cannot envisage a situation where the banks would pay us less than zero."

Cofunds and Ascentric pay below bank rate but say if it dropped to zero, they would ensure consumers do not have to pay to hold cash. Skandia pays around bank rate and says it will not go into negative territory if rates hit zero. Nucleus pays bank rate plus 0.2 per cent.

Standard Life's cash account also tracks below bank rate and says it does not know what policy it would adopt if it dropped below bank rate.

Thomas and Thomas Financial Services managing director Darren Lloyd Thomas says: "Given that the platforms have been pushing these accounts so heavily over recent months, they should have a policy on what will happen if bank rate drops to zero."

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