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How safe is a fund manager
katy123
Posts: 365 Forumite
My understanding is that the underlying investments are held at a custodian (separate entity to the fund manager) like with a bank. But, when you buy into a unit trust, the money is sent to the fund manager. What stops them from not passing this money over to the custodian (committing fraud) keeping it themselves?
The same question applies to sending your money to a stockbroker and knowing they have actually purchased the shares on your behalf to be held in a nominee account.
The same question applies to sending your money to a stockbroker and knowing they have actually purchased the shares on your behalf to be held in a nominee account.
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What stops them from not passing this money over to the custodian (committing fraud) keeping it themselves?
A range of compliance requirements and supervision. However, fraud can sometimes occur and the FSCS protection would kick in to cover that up to the limit if it brought the business down. Although the companies would cover the loss if they were able to.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.0
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