How safe are nominee accounts ?

SickStu

I've tried to find this out for myself but there seems to be 2 schools of thought, viz:-

1 - shares are ring fenced so no danger if broker goes bust.

2 - for FSA regulated brokers there is 100% compensation up to £30k then on a sliding scale beyond that up to a max of £50k.

Can anyone tell me the definitive answer. I have a self-select ISA which is approaching the £30k mark so want to know whether it's safe to put more into it or do i have to wear the costs of operating another so that I'm 100% covered.
Thanks.

jonesMUFCforever

Personally I think if they are regulated then they are safe.
In your opinion what would you prefer to do - open a second acount and pay what max of £70 pa or worry about the possibility of the brokers going bust?

Deemy

SickStu wrote:

I've tried to find this out for myself but there seems to be 2 schools of thought, viz:-

1 - shares are ring fenced so no danger if broker goes bust.

2 - for FSA regulated brokers there is 100% compensation up to £30k then on a sliding scale beyond that up to a max of £50k.

Can anyone tell me the definitive answer. I have a self-select ISA which is approaching the £30k mark so want to know whether it's safe to put more into it or do i have to wear the costs of operating another so that I'm 100% covered.
Thanks.

Well it depends on the TYPE of nominee account.. i.e. is the nominee account ringfenced or not. As if its ringfenced the company your buying into will be informed of the name of the person who owns the stock and your name will show in the share register.

Also you usually don't get the shareholder perks in just nominee accounts i.e. non ringfenced

SickStu

It's with iDealing. I've had a look it's 'pooled nominee' making it the non ringfenced type. That'll be why they're so cheap then. Think I'll start another - to be on the safe side.

priusy

I am still not sure how safe is the share nominee accounts. I have shares with Hoodlass Brennan and Iweb. Are they safe? Got a bit worried with what has happened with Northern Rock

gt94sss2

SickStu wrote: »

I've tried to find this out for myself but there seems to be 2 schools of thought, viz:-

1 - shares are ring fenced so no danger if broker goes bust.

2 - for FSA regulated brokers there is 100% compensation up to £30k then on a sliding scale beyond that up to a max of £50k.

Can anyone tell me the definitive answer.

They are both true.

Shares will be ring fenced in a nominee account which means that if a broker goes out of business you will still own the shares etc though there may be a slight delay before you can access your shares.

However, if there is fraud, then the FSA compensation kicks in. Some brokers also have additional insurance should this very unlikely event occur.

Regards
Sunil

gt94sss2

SickStu wrote: »

I've had a look it's 'pooled nominee' making it the non ringfenced type.

A pooled nominee account does not mean that the shares are not ringfenced - they are actually ringfenced from the brokers own assets, regardless of whether your name appears on a share register or not.

Regards
Sunil

rail.link

Are shares in all nominee accounts ring fenced ?

influence

interesting question indeed. Some of the nominees are actually major shareholders in FTSE firms and imagine these nominees goes bust for some reason. It would certainly be important to find out whether share owner has the right to claim back what they have invested.

Is there a way to ask the bank about the protection against share? I don't think it is wise to just ask a bank about what happen it goes bust:P

gt94sss2

rail.link wrote: »

Are shares in all nominee accounts ring fenced ?

That is what the FSA regulations will say..

Regards
Sunil

priusy

What is Martin L's comments?