S&s isa investment limit 24 January 2019 at 11:11AM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 2 replies 477 views

CaptainWales

I have 100k in a cash isa I want to move to s&s isa. Thinking of putting with one provider but wary of giving it all to one due to comp limit of only £50k.am iI being overly cautious here or is it better toto split the money between providers? Any advice greatly appreciated.

masonic

S&S providers ring-fence their assets under management. Any losses due to fraud etc would be shared between clients in proportion to their assets, so for example if 5% of the assets under management were stolen and it drove the company to insolvency, investments valued at £1m would have a £50k share of the loss, which would be fully covered by the FSCS. Significant providers have in excess of £50bn in assets under management, 5% would represent a >£2.5bn theft, which seems rather unlikely. If losses were confined to a single investment fund, which you held, then the safety margin could be lower, but holding 2-3x the FSCS limit would not concern me.

The other way money could be lost is through the costs of a provider becoming insolvent. There is precedent for these costs being capped per investor at a level well below the FSCS limit.

You should also consider that the limit is going up to £85k in April.

eskbanker

The FSCS protection limit is increasing to £85K for investments from April, but it's significantly more complicated than the cash equivalent, due to the number of parties involved and exactly what FSCS protects against, so, when investing, the case for strictly adhering to the FSCS limit is much weaker than for cash deposits.

dunstonh explains in more detail in post #20 at https://forums.moneysavingexpert.com/showthread.php?t=5808876

Edit: just like buses, wait for over two hours for a response then two come along at once!