MSE News: Chancellor faces renewed call to prevent 'absurd' savings protection cut

dunstonh

t seems unfair that banks and building societies with a genuine business model are subsidising ones that are unsustainable.

That goes across the whole financial services sector. Some are suffering disproportionately. Levies are now outstripping other costs

Take a look at the final levy figures on page 4:
http://www.fscs.org.uk/globalassets/publications/outlook_april-2015-v1.pdf

In most cases, investment failures fall under investment intermediation or life & pensions intermediation. Its usually the weird and unregulated that goes bump and if its in a wrapper than it was probably arranged by someone and they come after the arranger in most cases. A significant increase comes from pension cold calling introducers.

bit more:

http://www.ftadviser.com/2015/07/10/ifa-industry/companies-and-people/adviser-sees-regulatory-fee-hike-of-QM1af76PvE4Jry1OIGvO6M/article.html

Malthusian

Maybe MSE should campaign for this. It's seems utterly bizarre that the limit for savings is £75/85k yet for investments is 30% lower. Why isn't there a clamour for that to be raised to £75k?

Probably because of the extreme unlikeliness of anyone making a claim to the FSCS for investments. Normal market losses are of course not covered, nor is investing in something like a geared property scheme which goes tits up.

Even if your stockbroker or investment platform went bust, you would be unlikely to lose anything because your investments should be held in a nominee account and your various equities and bonds would still be sitting there. So nothing for the FSCS to do. Even if your stockbroker ran off with your money, you would have to be using a very small company or be the victim of an incredibly wide-scale fraud for the parent company not to be able to make good your losses. This is so unlikely that nobody really worries about what the compensation limit is.

The DotComUnity claim was as far as I'm aware for deposits, not investments.

Archi_Bald

Malthusian wrote: »

Probably because of the extreme unlikeliness of anyone making a claim to the FSCS for investments.

Are you advocating that the existing £50K protection should therefore be abolished?

jimjames

Malthusian wrote: »

Probably because of the extreme unlikeliness of anyone making a claim to the FSCS for investments. Normal market losses are of course not covered, nor is investing in something like a geared property scheme which goes tits up.

Given the unlikely nature of such a claim, surely it would justify a higher limit not a lower one especially as I'd expect the amounts in investments are higher than in savings accounts.
Dot com was a savings account so the claims were not for investments.

dunstonh

Just today in the financial press, another £50m has been earmarked by the FSCS for failed investments. As per usual, it will fall under the intermediation classification and not the investment classification.

Malthusian

Are you advocating that the existing £50K protection should therefore be abolished?

What gave you that idea?

Protection for investments is symbolic, and £50,000 is as good a symbol as any other.

Raising it risks giving people a false sense of security and creating an impression that the FSCS protects investment losses - as someone on this very thread was under.

It's not even worth the time cost of whoever's job it would be to update the FSCS's website and leaflets.