SVS Securities - shut down?

masonic

manorhouse said:

Not sure what was wrong with that johnburman seemed to enjoy reading it ?

You shouldn't copy a whole article and paste it here. MSE could get sued for copyright infringement so they have to remove such posts. A short excerpt and a link to the story is ok. See the Q&A "What are the rules on copyright?" here: https://www.moneysavingexpert.com/site/forum-faqs/#accordion-content-01363627502-12

juliamarsh

The level of costs gave me quite a shock (even though they are covered by the FSCS) until I realised that it is a fixed fee of £10626.50 for everybody, unless the value of your assets is less than this in which case it is capped at the actual value of your assets.

pafpcg

juliamarsh said:

The level of costs gave me quite a shock (even though they are covered by the FSCS) until I realised that it is a fixed fee of £10626.50 for everybody, unless the value of your assets is less than this in which case it is capped at the actual value of your assets.

Ooops!  Forget the 14%!

Because I knew that FSCS was picking-up the bill for the administration, I haven't been paying attention to how the costs would be apportioned - from the way the Client Statement presents the costs "calculation", I'd assumed that "my" costs were based on the value of my assets displayed in that calculation.  If it weren't for FSCS, some of the smaller clients of SVS would have lost everything! 

So on the basis of 20,000 SVS clients (19,200 unique clients) at £10k each, the LC bill wil be:
How much??  I don't believe it!!!!

manorhouse

The wrong doing had nothing to do with the share dealing accounts but other stuff these mangers where involved in .
Is there any punishment for the former directors or others involved ?
Looks like the cost although high was more the seven times less then the 85K  protection .
Are there comparisons to Beaufort and others to cost per client  ect 

johnburman

All
Two things for almost all XO clients:
a)  the costs of LC and the administration are crazy mad high high; but
b)  who cares as the FSCS is picking up the tab.

Now for the (very) few for whom the FSCS is not picking up the tab - mainly large companies or those with huge cash accounts they have problems
LEARNING POINT
If you use a (registered UK) broker and have under £85k in cash and assets your will be protected by the FSCS
If >£85k, you will only be protected if your 'losses' are to a MAX of £85k  (and there has been a debate here on whether losses includes the administrators fees). thsi means tha tthe client segregation rules - the FCA CASS Rules - are crucial.

This will influence which broker or group of brokers I will use in the future.  The simple streightforward ones offering transparent charging, with no "platform fees" will get my business

   

gollum007

wmb194 said:

I've been experimenting with Freetrade a bit and it seems much better than Trading212. Its stock selection is a little limited but it's okay for most (all?) FTSE350 companies including the more popular investment trusts and it executes trades at the prevailing best price. It's currently crowdsourcing and as I type has raised £6.5m so it should be around for a little longer. I haven't signed up to Crowdcube so cannot see what it claims its business case is.
https://www.crowdcube.com/companies/freetrade/pitches/bvP4rl

I'm using Freetrade with a small-mid sized IT porfolio. (Some other odds and sods, but nothing too major)

Personally, I wouldn't put anything over the FCS limit in there, and would keep a close eye on developments- They're still IMHO in the burning money stage of growth, with no decent revenue streams yet online.

The crowdfunding pitch is essentially focused around future plans (the Plus / Alpha sub, pensions etc.) which they hope will gain them revenue, along with interest from uninvested cash plus the +0.45% on the FX spot rate.

I can't see them going anywhere any time soon (too early in the crowdfunding / VC journey), but in 4-5 years I would expect either a sellout or drastic changes.

masonic

pafpcg said:

juliamarsh said:

The level of costs gave me quite a shock (even though they are covered by the FSCS) until I realised that it is a fixed fee of £10626.50 for everybody, unless the value of your assets is less than this in which case it is capped at the actual value of your assets.

Ooops!  Forget the 14%!

Because I knew that FSCS was picking-up the bill for the administration, I haven't been paying attention to how the costs would be apportioned - from the way the Client Statement presents the costs "calculation", I'd assumed that "my" costs were based on the value of my assets displayed in that calculation.  If it weren't for FSCS, some of the smaller clients of SVS would have lost everything! 

So on the basis of 20,000 SVS clients (19,200 unique clients) at £10k each, the LC bill wil be:
How much??  I don't believe it!!!!

The costs have been (so far):
~£400k in pre-administration costs (including fees related to applying for the administration)
~£4.7m in costs from 5th August to 4th February
I'd guess costs from 4th February to date wouldn't exceed another £2.5m
So perhaps £8.5m in total once the next couple of months are factored in.

The reason that the cost per client isn't the total cost divided by the number of clients (i.e. about £450 each) is that many of those clients wouldn't have had a significant sum of money invested. My account balance at the date of the administration was exactly zero - there must be many others like me, as well as many with just a few quid, some with a few hundred and others with a few thousand. None of these will be charged the full £10k and some will be charged nothing.

Regarding assets under management, there was £24.9m in client money and £278m in client assets, so over £300m in total. That means the costs would equate to about 3% of assets under management, not 14%.

masonic

johnburman said:

LEARNING POINT
If you use a (registered UK) broker and have under £85k in cash and assets your will be protected by the FSCS
If >£85k, you will only be protected if your 'losses' are to a MAX of £85k  (and there has been a debate here on whether losses includes the administrators fees). thsi means tha tthe client segregation rules - the FCA CASS Rules - are crucial.  

A minor point, but you will be protected even if your losses are above £85k. The FSCS still pays out on claims above £85k, they just limit the payout to £85k, so lose £100k and you'll get £85k compensation, not £0.

Also, losses do include administrators' fees, this is established in law. Administrators' fees can only be charged against assets held in the company in administration, so if the fees are greater than the assets held in the company, you cannot be billed for the difference. If, after the administrators complete their investigations, none of your assets are actually held by the company (for example they have been stolen by the directors), you cannot be charged anything towards the costs of the administration.

pafpcg

johnburman said:

..........
Now for the (very) few for whom the FSCS is not picking up the tab - mainly large companies or those with huge cash accounts they have problems
........

Are you sure about that? In a world without FSCS compensation, if the costs are charged to all clients at a flat rate (excluding those with assets less than the charges) then everyone pays the same: £10k.  That's not going to bother clients with high-value accounts, say £1million+. 

In fact, provided one is eligible for FSCS compensation, then the £85k limit is immaterial!  The cost of recovery of our assets has been £10k per client which will be covered by FSCS - it matters naught whether my account contained £10k or £10million.  What seems to matter is the overall cost of administration - what if Lloyds Banking Group collapsed taking with it all my bank accounts and the tens of thousands in my IWEB ISA?  The cost of adminstration of LBG would be enormous (fortunately spread over many clients), which might exceed £85k compensation.  The lesson to be learned is not to restrict the value of one's portfolio in any one platform, but to select a platform whose potential costs of administration would be less than £85k/client!

Or have I misunderstood how costs of administration would be apportioned to clients?  A flat-rate fee for all clients does seem to me to be unfair upon those with smaller accounts.

masonic

pafpcg said:

johnburman said:

..........
Now for the (very) few for whom the FSCS is not picking up the tab - mainly large companies or those with huge cash accounts they have problems
........

Are you sure about that? In a world without FSCS compensation, if the costs are charged to all clients at a flat rate (excluding those with assets less than the charges) then everyone pays the same: £10k.  That's not going to bother clients with high-value accounts, say £1million+. 

In fact, provided one is eligible for FSCS compensation, then the £85k limit is immaterial!  The cost of recovery of our assets has been £10k per client which will be covered by FSCS - it matters naught whether my account contained £10k or £10million.  What seems to matter is the overall cost of administration - what if Lloyds Banking Group collapsed taking with it all my bank accounts and the tens of thousands in my IWEB ISA?  The cost of adminstration of LBG would be enormous (fortunately spread over many clients), which might exceed £85k compensation.  The lesson to be learned is not to restrict the value of one's portfolio in any one platform, but to select a platform whose potential costs of administration would be less than £85k/client!

Or have I misunderstood how costs of administration would be apportioned to clients?  A flat-rate fee for all clients does seem to me to be unfair upon those with smaller accounts.

Interestingly in cases where investors are exempt from FSCS cover, such as mini-bonds, P2P, etc, flat-rate fees would be hugely unpopular and don't tend to be proposed, whereas when the FSCS picks up most of the bill, creditors generally prefer for their fees to come in below the FSCS limit for as many investors as possible. The FSCS ought to have a duty to minimise the amount they have to pay out (which comes out of industry funding and is ultimately paid for by the consumer), but seems to err on the side of covering as much as possible without overtly breaking any laws.

It could be argued that some elements of the work carried out by the administrators are the same for each investor regardless of portfolio size, and some of the work would be proportional to the number of holdings rather than the value of those holdings, so people with 100+ shares in their account and a large trading history ought to pay more. Trying to make things fair could make them horribly complex. Also, what constitutes fairness is probably impossible to get wide agreement about.