Is a pardner legal and safe?

Is a pardner legal in the UK?

We couldn’t find a UK law that bans a private pardner, or an official statement that says one is allowed. No regulator has published a clear answer. What we can tell you is how the official bodies treat these schemes.

MoneyHelper, the government-backed guidance service, lists rotating savings groups among unregulated savings schemes. It covers them whatever name they go by. People have run pardners in Britain for generations, and the Bank of England Museum has held an exhibition about them.

What unregulated means

According to MoneyHelper, the Financial Conduct Authority doesn’t regulate these schemes. That has a practical effect on you:

• No regulator checks the person running your pardner.
• The Financial Services Compensation Scheme doesn’t cover your money, as it does in a bank account.
• If the money is lost, MoneyHelper says you may not get any of it back.

When the answer could change

Our reading is that a private pardner among people who know each other is a different thing from a business handling other people’s money. The FCA says most firms providing financial services need its authorisation. If someone runs pools for strangers, takes a fee or promises a return, that may bring in rules a family pardner doesn’t meet. Get legal advice before you do any of those. This is our view and hasn’t been confirmed by a regulator.

Is a pardner safe?

It’s as safe as the people in it. Your money depends on every member continuing to pay, and on the banker if you have one. Be wary if you see any of these:

• Someone you don’t know offers you a place.
• The organiser promises you’ll get back more than you pay in.
• The organiser won’t tell you who else is in the group.
• You’re pressed to pay before you’ve seen the order and the rules.

A real pardner pays out exactly what goes in. If you’re promised profit, treat it as a warning.

How to lower the risk

• Join only with people you know, or people someone you trust can vouch for.
• Pay by bank transfer, so there’s a record.
• Get the rules and the order in writing before you pay.
• Keep the amount to what you could cope without.

Our guide to starting a pardner goes through the rules to agree.

This guide is general information and isn’t legal or financial advice.

Where CircleSave fits

CircleSave never holds members’ money. Members pay each other directly, and we keep the shared record of who has paid. That means there’s no CircleSave account for your money to sit in, and the FSCS doesn’t cover what you pay to other members. We can’t promise everyone will pay.