How safe is my ISA

jjgold

Is it safe to hold more than 50k in an ISA with one provider?
If I had 100k would it be better to have 50k with 2 providers?

These are stocks and shares ISA not cash

What about if I have a share dealing account with the same provider
Would it make sense to move that to someone else?

Alexland

Well you only get £50k s&s FSCS compensation per financial institution so it depends if you feel the advantages of simplicity and potentially lower fees for high balances (depending on your provider fee structure) are worth the small additional risk.

It also depends on what proportion of your overall wealth this is and what the lifestyle impact of loosing the money due to fraud etc. The assets are supposed to be held in client accounts separate from the business.

In our family we have a few investment accounts over the limit but we still spread our risk across different platforms and fund managers to manage the risk to acceptable levels of loss.

Audaxer

The FSCS limit of £50k is per broker/platform and for each fund house. I am wary about going too far over the limit in a platform or an individual fund. However most experienced investors on this forum don't seem to have any concerns about it and have advised previously that the risk is very minimal and would only occur if a major fraud took place in the platform or fund house.

le_loup

You need have no concerns unless you have more than £50K in cash with an S&S provider.
Each fund, IT, share, EFT has it's own risk which has nothing to do with the platform.

Audaxer

le_loup wrote: »

You need have no concerns unless you have more than £50K in cash with an S&S provider.
Each fund, IT, share, EFT has it's own risk which has nothing to do with the platform.

What if there was a major fraud on a platform or your funds weren't ring-fenced properly and somehow disappeared? I know it's a minor risk but I wouldn't like to have all my investments through the one platform for that reason.

Glen_Clark

Audaxer wrote: »

What if there was a major fraud on a platform or your funds weren't ring-fenced properly and somehow disappeared? I know it's a minor risk but I wouldn't like to have all my investments through the one platform for that reason.

You can't eliminate risk altogether, you can't avoid having to trust the system at some point.
I think you are talking about the platform trousering your money instead of buying the shares - like Bernard Madoff? But he was effectively a one man band, doing business on a nod and a wink, encouraging clients not to talk by insinuating they were benefitting from insider trading. A far cry from the plc's advertising their operations to all and sundry where too many people would know about a fraud to keep it quiet.
I am mildly concerned about open ended retail funds, because I have this vision of fund managers could use them to hide over valued stock, or excessive fees. Since open ended retail funds are not subject to the scrutiny of large professional investors who invest in the big Investment Trusts and ETFs (which also tend to have lower fees).

dunstonh

What assets do you hold in the ISA. Not all assets get FSCS protection. For example, shares, ITs & ETFs get no FSCS protection. UT/OEICs do.

I know it's a minor risk but I wouldn't like to have all my investments through the one platform for that reason.

If you went to a non-mainstream platform, then you increase the risks. If you were mainstream, then the risk is so small that if it worries you, then you shouldnt be investing in the first place.

The rules are tightening up on 3rd January which reduces the risk even further.

There is an expectation that some platforms will fail. It is not a highly profitable area and many platforms are loss making. So, getting your initial research right and getting the correct platform is important.

chockydavid1983

What's happening on the 3rd of January? :-)

dunstonh

chockydavid1983 wrote: »

What's happening on the 3rd of January? :-)

MiFID II.

A new EU directive. A pain in the backside for many of us but like most bloated directives, there are some things that are a good idea hidden in with the pointless stuff.

Audaxer

dunstonh wrote: »

There is an expectation that some platforms will fail. It is not a highly profitable area and many platforms are loss making. So, getting your initial research right and getting the correct platform is important.

So what would happen if a platform failed? Is there a chance that you would lose your investments?

bowlhead99

Audaxer wrote: »

So what would happen if a platform failed? Is there a chance that you would lose your investments?

Someone else that wanted the business for their non-failed platform would come along and take it over, to grow their business and customer base by increasing their assets under administration.

You would still have the investments which had been registered for you by failedplatform ltd but instead they would be being administered by successorplatform ltd. During the transition, you may find it difficult to transact or transfer in or out.

So, you wouldn't 'lose' your investments but may have some administrative difficulties which could be unwelcome.

An example where you would 'lose' them would be in the case of fraud as alluded to by you/others up the thread - for example, failedplatform ltd had never actually bought those investments for you, and instead just pocketed your subscription monies and written you up a fake contract note saying they subscribed you to a fund but they didn't really... then successorplatform won't be able to give you access to them because the investments don't exist. In that case you had already 'lost' your money but didn't realise it until the old platform went under. As the old platform was no longer around to pay you compensation for their fraudulent behaviour, FSCS would cover your first £50k. But the other investments that you had with oldplatform which were genuinely acquired on your behalf, would still be yours.