SVS Securities - shut down?

lulu999

"as our approach for security transfers (subject to reconciliation) is line by line."

Seriously? In other words they're doing it manually which will take ages and be riddled with errors.

bowlhead99

Sheris said:

leonde said:

johnburman said:

Leonde. A Google alert is useful to tell you when something has happened but it will not give you advanced notice. As an aside I am surprised to read of the low levels of protection given in certain EU countries. Euro 20k is far too small. I think the 85k GBP limit here is too low. The higher the limit the more incentive the regulators have to keep an eye on those they are regulating. 

SVS were investigated prior to 2018, so such an event could act as a red flag. Although the reality is that I would probably have ignored it if I had known - but last year's experience has probably made me a lot more wary.

Many red flags even HMRC before, how many more people after 2018 continued to invest there hard earned money into the SVS blackhole, not knowing.   

In early 2017 it was public knowledge that SVS were defendants in a high court judgement relating to a VAT fraud case; SVS's financial statements available freely online via companies house for the years ended June 2017 and 2018 disclosed that HMRC had an VAT claim relating to emissions trading which SVS didn't agree with (a contingent liability without a value being put on it); the accounts published in 2018 state that online x-o revenue was down 5% for the year (with a larger reduction in new clients and active accounts) within an overall 13% decline in retail broking revenue; and that the x-o business made a small gross loss for the year; that product didn't provide as wide scope of services as some of their rivals, and pricing was coming down in the industry; they had more than 30% decline in FX trading revenues, and the costs of servicing the FX clients (mainly PRC residents) coupled with demands of attracting new clients etc would start to have a detrimental effect on that department's revenue and profitability, exacerbated by impending regulatory changes. They noted that their business getting most of its overall revenue from principal trading was 'one of the last of its kind' with retail customers preferring the agency model.

So while some people would think "OK this is a well known cheap broker, its probably safe, I'll move my business to them (or not move away from them)" it was possible to find things in the public domain which would show that the x-o product you were using at low cost was not profitable for them and that other parts of the business which contributed to their overall profits, faced strong headwinds.  At the end of the day, execution-only stock trading investors are making judgements about companies' prospects all the time, so it is not much of a stretch for them to be curious about the financial stability or longevity of the broker who will be holding all their assets. 

Clearly reading some accounts that show a lack of profitability of the product you're buying, and not finding the other negative news in the press containing red flags, is not necessarily going to make someone stop using a broker. Often we're happy to be using the part of a business that doesn't make a profit and effectively be subsidised by people using their more profitable services. But with the experience of 'look how much of a hassle it can be if a broker fails and you lose access to your assets for a year', I think people may be justifiably cautious about which low-cost services they use in future, and the likes of Trading 212 or the like who give you commission free trading and hope to make profits on CFDs to keep the money rolling in, will be offputting for some looking for a new home for their investment business

pafpcg

lulu999 said:

"as our approach for security transfers (subject to reconciliation) is line by line."

Seriously? In other words they're doing it manually which will take ages and be riddled with errors.

There are 73,830 individual security holdings in the SVS data-base.  Yes, a lengthy task if it needs manual review, but I'd say there's a good chance that this could be mechanised.  What would be less easy to mechanise is checking that the transfer of the correct number of shares of each equity from the SVS nominee to the ITI nominee via each equity's registrar has been completed. (Of course, there will be only one transfer for all the individual holdings in each equity eg BT.A.)  But they have had since early June when "ownership" passed to ITI, and weeks before that to prepare.

Sheris

bowlhead99 said:

Sheris said:

leonde said:

johnburman said:

Leonde. A Google alert is useful to tell you when something has happened but it will not give you advanced notice. As an aside I am surprised to read of the low levels of protection given in certain EU countries. Euro 20k is far too small. I think the 85k GBP limit here is too low. The higher the limit the more incentive the regulators have to keep an eye on those they are regulating. 

SVS were investigated prior to 2018, so such an event could act as a red flag. Although the reality is that I would probably have ignored it if I had known - but last year's experience has probably made me a lot more wary.

Many red flags even HMRC before, how many more people after 2018 continued to invest there hard earned money into the SVS blackhole, not knowing.   

In early 2017 it was public knowledge that SVS were defendants in a high court judgement relating to a VAT fraud case; SVS's financial statements available freely online via companies house for the years ended June 2017 and 2018 disclosed that HMRC had an VAT claim relating to emissions trading which SVS didn't agree with (a contingent liability without a value being put on it); the accounts published in 2018 state that online x-o revenue was down 5% for the year (with a larger reduction in new clients and active accounts) within an overall 13% decline in retail broking revenue; and that the x-o business made a small gross loss for the year; that product didn't provide as wide scope of services as some of their rivals, and pricing was coming down in the industry; they had more than 30% decline in FX trading revenues, and the costs of servicing the FX clients (mainly PRC residents) coupled with demands of attracting new clients etc would start to have a detrimental effect on that department's revenue and profitability, exacerbated by impending regulatory changes. They noted that their business getting most of its overall revenue from principal trading was 'one of the last of its kind' with retail customers preferring the agency model.

So while some people would think "OK this is a well known cheap broker, its probably safe, I'll move my business to them (or not move away from them)" it was possible to find things in the public domain which would show that the x-o product you were using at low cost was not profitable for them and that other parts of the business which contributed to their overall profits, faced strong headwinds.  At the end of the day, execution-only stock trading investors are making judgements about companies' prospects all the time, so it is not much of a stretch for them to be curious about the financial stability or longevity of the broker who will be holding all their assets. 

Clearly reading some accounts that show a lack of profitability of the product you're buying, and not finding the other negative news in the press containing red flags, is not necessarily going to make someone stop using a broker. Often we're happy to be using the part of a business that doesn't make a profit and effectively be subsidised by people using their more profitable services. But with the experience of 'look how much of a hassle it can be if a broker fails and you lose access to your assets for a year', I think people may be justifiably cautious about which low-cost services they use in future, and the likes of Trading 212 or the like who give you commission free trading and hope to make profits on CFDs to keep the money rolling in, will be offputting for some looking for a new home for their investment business

Thank you for info, i did not know of the the past problems with SVS and like many others, untill the !!!!!! hits the fan.                      so it was not public notice, Martin Lewis recommended SVS on his Money Programme about eight years ago, so on that I opened a account, with NO issues untill last August. I have had more problems with L&C with no response most of the time.
L&C would not give me the details of the person or persons that where the reprensation for the clients, many times I asked and that was in early January, I then knew this is not good.    

Ravima

Still nothing from ITI.

bowlhead99

Sheris said:

bowlhead99 said:

Sheris said:

leonde said:

johnburman said:

Leonde. A Google alert is useful to tell you when something has happened but it will not give you advanced notice. As an aside I am surprised to read of the low levels of protection given in certain EU countries. Euro 20k is far too small. I think the 85k GBP limit here is too low. The higher the limit the more incentive the regulators have to keep an eye on those they are regulating. 

SVS were investigated prior to 2018, so such an event could act as a red flag. Although the reality is that I would probably have ignored it if I had known - but last year's experience has probably made me a lot more wary.

Many red flags even HMRC before, how many more people after 2018 continued to invest there hard earned money into the SVS blackhole, not knowing.   

In early 2017 it was public knowledge that SVS were defendants in a high court judgement relating to a VAT fraud case; SVS's financial statements available freely online via companies house for the years ended June 2017 and 2018 disclosed that HMRC had an VAT claim relating to emissions trading which SVS didn't agree with (a contingent liability without a value being put on it); the accounts published in 2018 state that online x-o revenue was down 5% for the year (with a larger reduction in new clients and active accounts) within an overall 13% decline in retail broking revenue; and that the x-o business made a small gross loss for the year; that product didn't provide as wide scope of services as some of their rivals, and pricing was coming down in the industry; they had more than 30% decline in FX trading revenues, and the costs of servicing the FX clients (mainly PRC residents) coupled with demands of attracting new clients etc would start to have a detrimental effect on that department's revenue and profitability, exacerbated by impending regulatory changes. They noted that their business getting most of its overall revenue from principal trading was 'one of the last of its kind' with retail customers preferring the agency model.

So while some people would think "OK this is a well known cheap broker, its probably safe, I'll move my business to them (or not move away from them)" it was possible to find things in the public domain which would show that the x-o product you were using at low cost was not profitable for them and that other parts of the business which contributed to their overall profits, faced strong headwinds.  At the end of the day, execution-only stock trading investors are making judgements about companies' prospects all the time, so it is not much of a stretch for them to be curious about the financial stability or longevity of the broker who will be holding all their assets. 

Clearly reading some accounts that show a lack of profitability of the product you're buying, and not finding the other negative news in the press containing red flags, is not necessarily going to make someone stop using a broker. Often we're happy to be using the part of a business that doesn't make a profit and effectively be subsidised by people using their more profitable services. But with the experience of 'look how much of a hassle it can be if a broker fails and you lose access to your assets for a year', I think people may be justifiably cautious about which low-cost services they use in future, and the likes of Trading 212 or the like who give you commission free trading and hope to make profits on CFDs to keep the money rolling in, will be offputting for some looking for a new home for their investment business

Thank you for info, i did not know of the the past problems with SVS and like many others, untill the !!!!!! hits the fan.                      so it was not public notice, Martin Lewis recommended SVS on his Money Programme about eight years ago, so on that I opened a account, with NO issues untill last August. I have had more problems with L&C with no response most of the time.

Sure, and when I say something is public knowledge, I don't mean that every member of the public is personally aware of it or has received some sort of warning flag notice. 

Just that it's 'public knowledge' in the sense that this information is not confidential and you can find it if you want, in the same way that if you wanted to consider the financial strength of the company that has issued some shares that you are going to buy, you can do some deep research rather than simply seeing that the price has gone higher or lower on a chart.

For example, here's a high court judgement from 2017  published by the UK judiciary when they were defending the emissions trading stuff, and here's a set of financial accounts from June 2018 which UK companies are required to file annually with companies house. If you were interested in your broker's business you could have taken steps to find out more about it in 2017,18,19 or earlier.

I'm not criticising individuals for not knowing about it, just pointing out that now people are aware of the potential pain of having their investment platform die on them, they shouldn't wander obliviously into another frying pan elsewhere - especially if they are the sort of competent non-passive investor who makes value judgements about which individual companies to buy and sell in a portfolio.

Sheris

Thanks, info for those in this mess is very important to try and help others 

manorhouse

bowlhead99 said:

manorhouse said:
Thankyou for that bowlhead i suspect you are correct with the guy on the phone claiming 100k euro.

Do you think Degiro and Feneco have the same cover ?
I was surprised the Feneco persons had not heard of Degiro as that is who they are competing with in my opinion .
All speak very good English ( you chose Italian or English ) 

The Netherlands compensation scheme for investments is the same maximum €20k as the italian one (we have discussed it already in the thread); €20k is the minimum level agreed by EU for a national scheme to use, though some such as the UK's are higher.

If the business goes bust like SVS and customer services stops being a focus for them, the administrators coming in to sort out the mess don't have any obligation to recruit staff who speak very good English, and the claim you put in with the national compensation scheme would be in Italian (although the guarantee fund has english versions of its web pages, it still takes you to an italian claim form (http://www.fondonazionaledigaranzia.it/htm_20/Mod. istanza.pdf).  From day to day it's fine using foreign service providers and the whole premise of the EU is free movement of people and goods and services so that people can buy wherever they like, making Degiro and Fineco competitors in both offering online brokerage to international customers although Fineco is much larger and offers bank accounts too.

But if you're shopping around, especially internationally, it makes sense to consider "what could go wrong" rather than just "what's the day to day service and fees like".

Just opened an email informing me Degiro has now been taken over and from tomorrow I will be under a German bank .
Maybe this is a good thing regarding safety be lovely if the Germans trade JSE .

snipkin

I have said before on this SVS forum that I have never seen any warnings about the possibility of brokers going the way of SVS (and quite a few other brokers have 'died' before SVS, I am now aware). The fact that, if it happens, suddenly one has no access to one's investments was a great shock to me and that you could end up with only £85,000 maximum compensation if there was no money left – luckily not a situation that occurred with SVS. I had never even considered that such a thing could happen with such consequences. There needs to be more education about the whole 'nominee' system of share ‘owning’ – you somehow do not really own the shares, it seems. And the so-called ‘ring-fencing’ of our assets – in accordance with the provisions of the FCA CASS rules. If this was robust why all the need to prove who we are and ‘the reconciliation ‘line-by-line’ all our share holdings etc??

The only safe way to really own shares - as I understand it - is to get hold of the actual share certificates for all the shares that one owns. It costs more to do this, perhaps it’s not even a service offered by the low cost xo-style brokers, and it is obviously a hassle if you trade often. Is holding the share certificates the best thing to do to ‘sidestep’ any problems with a broker?

Also, there should be warnings, like with banks and building societies, not to place more than £85K with any one broker to ensure you are covered by the FSCS. I do not recall ever seeing such a warning in connection with share dealing companies. And this whole SVS fiasco has taught me how little I understood about the actual share owning process these days in the electronic world – a lesson learned the hard way. Good old paper is still the best thing – or is this a paranoid/extreme viewpoint?

I’ll never forget the horrible feeling when I received that letter about SVS last August, like I was in free fall, after just returning from a lovely holiday… The sleepless nights... And, like others have said, this forum has been a lifeline for me.

bowlhead99

manorhouse said:

bowlhead99 said:

manorhouse said:
Thankyou for that bowlhead i suspect you are correct with the guy on the phone claiming 100k euro.

Do you think Degiro and Feneco have the same cover ?
I was surprised the Feneco persons had not heard of Degiro as that is who they are competing with in my opinion .
All speak very good English ( you chose Italian or English ) 

The Netherlands compensation scheme for investments is the same maximum €20k as the italian one (we have discussed it already in the thread); €20k is the minimum level agreed by EU for a national scheme to use, though some such as the UK's are higher.

If the business goes bust like SVS and customer services stops being a focus for them, the administrators coming in to sort out the mess don't have any obligation to recruit staff who speak very good English, and the claim you put in with the national compensation scheme would be in Italian (although the guarantee fund has english versions of its web pages, it still takes you to an italian claim form (http://www.fondonazionaledigaranzia.it/htm_20/Mod. istanza.pdf).  From day to day it's fine using foreign service providers and the whole premise of the EU is free movement of people and goods and services so that people can buy wherever they like, making Degiro and Fineco competitors in both offering online brokerage to international customers although Fineco is much larger and offers bank accounts too.

But if you're shopping around, especially internationally, it makes sense to consider "what could go wrong" rather than just "what's the day to day service and fees like".

Just opened an email informing me Degiro has now been taken over and from tomorrow I will be under a German bank .
Maybe this is a good thing regarding safety be lovely if the Germans trade JSE .

That was announced last December- the German parent Flatex was very much a local player in the DACH region while Degiro has a broader reach in western and southern Europe. They are stock exchange listed so had to announce it after buying a piece last year and waiting regulatory approval on the rest. They had said they were going to buy it for £250m and keep both brands. At under a billion of market cap they are still smaller than Fineco, but becoming part of a listed group is probably welcome for Degiro.