Topping up grandchild's investment account

littlerock

My son has set up an investment isa with Hargreaves Lansdown for my granddaughter. I wish to pay in a lump sum but am a bit puzzled by all the questions I have to answer to do this - for example date of birth, time at current address etc. Is this really necessary? (I was born in UK of UK parents and the money is coming out of a UK bank account.)

bowlhead99

They can ask what they like. Sorry to be blunt but YOU know you have lived in the UK since birth and you have access to all your own identity documents, but do THEY?

Financial services businesses have all sorts of regulations to deal with in relation to anti- money laundering and countering the financing of terrorism. Just because you have money in a UK bank account does not mean they can just take all the cash and pay it out to your son or his children without asking questions about where it came from. If you turn out to be a wrong'un, it is no defence for them to say they thought that the previous bank in the chain would have checked out who you were.

littlerock

Mmm - If I want to pay some money into grandchild's junior bank account (as opposed to their investment account managed by their father) I can do that by bank transfer without providing any personal details. I recently paid some money (a gift) by bank transfer into the bank account of my d-i-l who is a Canadian citizen but has a UK bank account while she is living in the UK. I was not required to supply my date of birth. Why is putting money into my grand childs ISA account different? What I am really concerned about is my personal details proliferating all over different systems. The obvious thing I suppose would be to put money into grandchild's junior bank account and let son transfer it into her HL ISA.

bowlhead99

You are right, if your granchild or daughter in law has a current account or perhaps even a savings account that accepts direct credits you can just fire money into it. Current accounts are designed to receive in and pay out money all the time. Transactions happen fast and often and most individual transactions are not a big deal. If the bank wants to ask questions about the account activity to the person that runs the accounts (the parent/guardian of the grandchild, or the daughter-in-law herself for her own account), they can. But they operate so many millions of bank accounts with so many transactions that they do not flag many of them up for review.

However, while the daughter-in-law's current account is essentially owned and operated by the daughter in law herself, the investment ISA is a bit different. The ISA is effectively owned and operated by an ISA manager who acquires assets (shares and investment funds and so on) which are legally held in the name of his investment company as nominee/trustee, for the benefit of a whole load of customers of which I might be one, your daughter is one and so on.

When your daughter (who is a minor and therefore unlikely to have her own salaried income) wants to put a chunk more money into the investment product and the ISA manager is going to use that money to go and spend it on investment opportunities for her benefit, he has the right to ask where that money has come from. It is one of the rules of the investment world. Each financial services business engaged in such investment activity is required to implement procedures to understand the source of funds, particularly if it is not coming from the account of the person whose account it is. The rules may not be the same at every investment firm, because they can implement their own choice of procedures, but they all have them.

Some of them, in quite a high profile way, are occasionally found to be lacking, which is when you hear about HSBC being fined tens of millions of dollars and having its directors potentially sent to jail due to failings in its anti money laundering, know your client processes and procedures. As an experiment, try walking into a few investment firms this week and asking them if you can please open an investment account where you do not need to give them very much information about where the money has come from. See what a response you get.

I'm not saying you have to like it by the way, just trying to explain what is happening. If you don't like it, ask your son to change investment firms (there are plenty around that are cheaper than HL - you could perhaps suggest one of the ones you find on the high street that don't ask questions). Or gift the money outright to your granddaughter or son and tell them to deal with putting it in the investment account themselves.

xylophone

http://www.hl.co.uk/investment-services/junior-isa/topping-up-junior-isa?theSource=PCHLJ&Override=1&sitelink=C&gclid=CI-f6Mm008QCFdPMtAod-l4Alw

According to the above, the process should be fairly simple?

"How can I top up a Junior ISA?
Junior ISA top ups can be made online, by post or by telephone as a lump sum or by monthly savings.

Subscriptions can be made to an existing Junior ISA online using a debit card - the process takes less than three minutes. You won't need to place an investment instruction with the gift - the parent or guardian who manages the account will take care of that.

When you've finished the subscription you will be given the chance to include a message for the child.

Top up an existing Vantage Junior ISA

Please note: To top up a Junior ISA with a one-off payment or to set up a monthly regular savings plan online we require either the child's username or client number. If you don't have these details please contact the child's parent or guardian."


No mention of requiring your inside leg measurement etc..:)

littlerock

agreed. I am sure this is new and bear in mind this is not the first time I have put money into it and my details are unchanged since last time .

I take bowlhead's point but given the involvement of the banks in money laundering and tax avoidance it seems that collecting personal information like this is in fact just box ticking which does little more than collect data from the law abiding while the big players are helped by the banks to avoid just the sort of scrutiny the laws were designed to cover