FSCS protection for Stocks and Shares ISAs

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MoneySavingUser
MoneySavingUser Posts: 1,667 Forumite
in ISAs & tax-free savings
Just to make sure I understand this correctly - shares/funds helds in an S&S ISA are protected by the FSCS upto £50,000 - correct?

Is it possible to have cash in an institution protected upto £75,000 and investments in the same place also protected upto £50,000?

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  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    Is it possible to have cash in an institution protected upto £75,000 and investments in the same place also protected upto £50,000?

    Two different things. One is deposit, one is investment. You cant have the in the same place even if they have the same logo.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • MoneySavingUser
    MoneySavingUser Posts: 1,667 Forumite
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    dunstonh wrote: »
    Two different things. One is deposit, one is investment. You cant have the in the same place even if they have the same logo.
    OK so if ABC bank has 2 products one would be run by ABC bank Ltd and the other by ABC Investments Ltd each with a different type of FCA authorisation and one with the £75k protection and the other with the £50k protection?

    edit: I mean for Cash ISA vs S&S ISA
  • balf
    balf Posts: 47 Forumite
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    It doesn't matter where you hold shares there is no compensation in the case of loss.

    If you buy shares in Dodgy Corp Inc and it goes belly up you lose. Holding it in an ISA makes no difference.

    David.
  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    ....but FSCS does offer protection against failure of the investment firm, which is what the above posters are discussing, see http://www.fscs.org.uk/what-we-cover/products/investments/
  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    OK so if ABC bank has 2 products one would be run by ABC bank Ltd and the other by ABC Investments Ltd each with a different type of FCA authorisation and one with the £75k protection and the other with the £50k protection?

    Yes. (10 char limit).

    Although in most cases it is best to avoid banks for investments. Poor quality, expensive and even where third party providers are used, they are often cut down versions and/or more expensive of the whole of market version.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Linton
    Linton Posts: 17,162 Forumite
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    The purpose of FSCS protection for savings and investments is very different. Money you deposit in a bank is legally owned by the bank, which promises to pay it back to you. Unless the government does something such as setting up a guarantee scheme the position is that if a bank cant honour its commitment you lose your money.

    Regulated investments on the other hand are always your property. So if a broker or a fund manager fails the investments remain yours and can be transferred to another broker/fund manager. If this were to go wrong one would immediately suspect fraud. The chances of fraud are controlled via regulation. So FSCS protection of investments is not a serious practical concern in my view. It certainly doesnt prevent me and many other people having holdings far larger than the protection limit.
  • balf
    balf Posts: 47 Forumite
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    eskbanker wrote: »
    ....but FSCS does offer protection against failure of the investment firm, which is what the above posters are discussing, see http://www.fscs.org.uk/what-we-cover/products/investments/

    While that is correct anyone searching these threads for information could and very probably would read the OPs question as that there was a guarantee within an ISA against stock losses.

    I think we should all be more specific when dealing with financial dealings.

    David.
  • badger09
    badger09 Posts: 11,206 Forumite
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    balf wrote: »
    While that is correct anyone searching these threads for information could and very probably would read the OPs question as that there was a guarantee within an ISA against stock losses.

    I think we should all be more specific when dealing with financial dealings.

    David.

    Indeed

    Just as many people will be convinced that Santander has cut its 123 account top tier interest rate from 3% to 2%, due to several misleading thread headings.

    Sadly, its unavoidable:(
  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    balf wrote: »
    While that is correct anyone searching these threads for information could and very probably would read the OPs question as that there was a guarantee within an ISA against stock losses.

    I think we should all be more specific when dealing with financial dealings.

    David.
    I agree, which is why I amplified on your point to add information about what FSCS does cover as well as what it doesn't, plus a link for people to read to see for themselves!
  • masonic
    masonic Posts: 23,275 Forumite
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    balf wrote: »
    I think we should all be more specific when dealing with financial dealings.
    I would tend to disagree. Being specific is what led to this confusion in the first place. The OP asked a specific question and others answered that specific question without elaborating on the vagaries of the FSCS compensation scheme as it applies to investments vs. cash.

    Then you entered, with what could be taken to be a well meaning clarification, but unfortunately this was itself too specific and focused on just one scenario in which compensation would not be paid.

    So we are then left in the situation where the casual reader might be misled into thinking FSCS protection for investments is useless... Enter, eskbanker to inject some balance and we have something resembling an informative series of posts on the subject.
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