S&s platform risk

firestone

the HL site would seem to suggest that customers money can not be used by administrators

firestone

Thrugelmir wrote: »

Administrators often retain many of the existing staff to assist in winding down operations. Likewise offices and computer systems need to be maintained. Have to be paid from somewhere.

when my company went bust some staff were not paid and let go the few who remained were paid from the assets that could be sold but many creditors got no money.While a fund platform may work in a different way surely only the company assets & fee's coming in can be used not peoples funds

bowlhead99

firestone wrote: »

when my company went bust some staff were not paid and let go the few who remained were paid from the assets that could be sold but many creditors got no money.While a fund platform may work in a different way surely only the company assets & fee's coming in can be used not peoples funds

firestone wrote: »

the HL site would seem to suggest that customers money can not be used by administrators

Well it can if there is no other money left to go around.

I remembered it was tg99 who had previously posted the answer to 'how can they do this' when it was posed recently in the Lords in connection with Beaufort (but on the point of law generally)

Q Asked by Lord Lee of TraffordAsked on: 24 April 2018
TreasuryFinancial Services: InsolvencyHL7245

To ask Her Majesty's Government what is the legal basis that allows administrators of failed stockbroking firms to levy charges on clients' assets held by those firms.

A Answered by: Lord Bates Answered on: 08 May 2018

The legal basis for the payment of administrators' expenses from client assets is contained within rule 135 of the Investment Bank Special Administration Rules (England and Wales) 2011 (Statutory Instrument 2011/1301).

The Investment Bank Special Administration Rules apply to a broad range of businesses which hold client assets and are authorised to carry on a regulated activity which relates to the dealing, safeguarding or administration of investments as agent or principal, including stockbrokers.

Rule 135 sets out that client assets may be used only to pay the expenses which administrators have properly incurred as a result of the work undertaken to ensure that client assets are returned as quickly as possible. The rule also sets out the order of priority for payment of those expenses.

A previous comment I made on the subject to save excessive re-typing; my view and the answer hasn't really changed:

https://forums.moneysavingexpert.com/discussion/comment/74267475#Comment_74267475

firestone

i get the argument for paying administration fee's as posted on the Beaufort issue - But while reading the section on Fidelity called how is my money protected it says the client & asset rules apply whether you have 8,000 or 800,000 invested.Money in funds cannot be taken & used for money owed by Fidelity or given to creditors as they are held in nominee accounts with you clearly identified as the owner.Have one eye on the tv but can see no mention of paying administration fee's so guess someone maybe in for a surprise

dunstonh

Its best not to compare Beaufort with your platform. Beaufort was not a platform. Beaufort were a discretionary investment service with client money permissions. They were not using funds like you would be using on platforms. They were the investment strategy and they chose the individual assets. Beaufort focued on niche/specialist high risk assets that were often illiquid.

Where funds are held on a platform, there really wouldn't be much work for an administrator. However, with Beaufort there is. In a way, its closer to a fund house having to call in the administrator to wind down its investments. Arch Cru would be a similar scenario in fund form.

jamei305

Does anyone know who owns Interactive Investor? As far as I can tell it's via a holding company in Guernsey, Antler Holdco Ltd.

bowlhead99

jamei305 wrote: »

Does anyone know who owns Interactive Investor? As far as I can tell it's via a holding company in Guernsey, Antler Holdco Ltd.

It's owned by private equity investment funds managed by JC Flowers.


http://www.jcfco.com/our-investments/

stphnstevey

jimjames wrote: »

Is this actually true? If there has been no fraud and client assets are secure, then I wasn't aware that the administrator could recover their fees from clients?

Is that definitely correct?

Quoted from H&L website
http://www.hl.co.uk/security-centre/how-safe-is-your-investment

firestone

followed by lower in the link that your investments are held in a nominee account in a non trading company that can't run up liabilities of its own so can't be touched by creditors.So i assume (maybe wrongly) the administrator would first take their fee from HL assets as there first in line,of which you would guess there would be enough but even so your investments can not be used for wages,suppliers etc.If in the unlikely event a fee was to be paid would it matter if you had £20000 or £2000000?

kidmugsy

stphnstevey wrote: »

The £50,000 limit for investments is going up to £85,000 from April 2019

I didn't know that; thank you. Can you point me to an official source, please?