SVS Securities - shut down?

sweeter_strudel

jenwrendorset said:

Apart from the responses from the FOS which may be months down the line, we're just about done with ITI and our transfers are now all with iWeb however that now beggars a question which perhaps someone more savvy in the investing world can throw some light on.  The sudden demise of SVS was a wake up call for many of us, I never saw that coming. I realise that our share holdings were safe albeit inaccessible for many months, but that apart we had the FSCS backing of £85K however at that point our accounts were well under that amount so not a worry. With todays's dismal bank interest rates we are intending to utilise our full ISA allowances this year which will see a couple of our accounts exceed the £85K limit. Should we be seeking out a new broker at this point or are we ok to stay with iWeb - we only hold funds and individual shares, no bonds or AIM listed shares. We're not buying or selling on a regular basis, this is just a way of trying to make better use of our retirement savings just in case we're ever allowed out again to play or spend some of our money.  Any advice gratefully received - this forum and ShareSoc have been a godsend to us, I know we would have struggled without everyone's input.  If a move to another broker is advised then any recommendations bearing in mind that we're well into our dotage now so 'simple and easy to understand' is the name of the game........pity LC didn't follow that criteria. Many thanks in anticipation.

I think the key detail to remember is what would happen to you if iWeb "did an SVS". The £85k loss compensation is a moot point regarding whether it is too small or perfectly OK until your holding with one institution is above ~£750k.

There is definitely an argument to keep investments with financially robust companies - or one where the government still hold a chunk of the shares.

More important is would you survive if iWeb were inaccessible for 12+ months? This is perhaps when you should consider splitting investments between brokers. I wouldn't make one a trading account and the other dull but worthy long term holdings but try and mix asset types to have a balance between each. Otherwise you may discover you have to rely on a trading account to pay your electricity bill, or buy food.

I'm in the process of balancing my SIPP between two providers just to avoid the SVS scenario when I'm retired and don't have the cushion of an income from a paid job.

eskbanker

sweeter_strudel said:

More important is would you survive if iWeb were inaccessible for 12+ months? This is perhaps when you should consider splitting investments between brokers. I wouldn't make one a trading account and the other dull but worthy long term holdings but try and mix asset types to have a balance between each. Otherwise you may discover you have to rely on a trading account to pay your electricity bill, or buy food.

Anyone who is tying money up in investments that could be needed for essential day-to-day expenditure within a year or two is running a significant and avoidable risk - quite apart from the question of broker stability, it is far more prudent to use readily-accessible cash deposit accounts for such money rather than potentially needing to sell at inopportune moments....

sweeter_strudel

eskbanker said:

sweeter_strudel said:

More important is would you survive if iWeb were inaccessible for 12+ months? This is perhaps when you should consider splitting investments between brokers. I wouldn't make one a trading account and the other dull but worthy long term holdings but try and mix asset types to have a balance between each. Otherwise you may discover you have to rely on a trading account to pay your electricity bill, or buy food.

Anyone who is tying money up in investments that could be needed for essential day-to-day expenditure within a year or two is running a significant and avoidable risk - quite apart from the question of broker stability, it is far more prudent to use readily-accessible cash deposit accounts for such money rather than potentially needing to sell at inopportune moments....

Esk, the concern was how to mitigate the impact of another SVS  scenario.
You may initially be paying the routine bills out of a handy cash savings account, but after several months of this whilst an investment remains inaccessible you may hit financial hardship. It would probably take one large unexpected bill to ruin the figures in your spreadsheet projecting your household spending.

If you do split investments I was thinking it may be wise to have a balanced split rather than as someone suggested here, long term holdings with one broker and do your adrenalin rush trading with a different broker. If one of those brokers is shut down for month after month  that is the scenario where you may have to sell to pay bills, having run out of cash. With a balanced mix of assets across every broker you can then continue to do the adrenalin rush trading and take a cash top up from selling long term holdings - perhaps at half the scale of what it should be as you await the shut down holdings to be liberated.

SVS was primarily holding the adrenalin thrill part of my portfolio..... So part of this is my own lessons learned. I discovered myself making the dull and safer bits of my portfolio more exciting by buying riskier shares simply cos I still wanted to trade and was bored / impatient / frustrated and eventually furious with the SVS / ITI debacle as the months dragged on.

jenwrendorset

My question certainly brought forth some really interesting and helpful comments, thanks to everyone for your thoughts. I was purely concentrating on the £85K limit rather than the inaccessibility of funds should our broker do a 'SVS' on us.  We're both well retired now so have a regular but not huge pension income.....this has made me realise that it would certainly be the sensible option to utilise the next tax year's ISA allowance with a different broker. Up to now we've always maintained a sensible cash balance for the 'just in case' scenarios but 0.5% interest with the banks is pathetic hence the re-think with investing.  Will now suss out a second broker - we'd be really unlucky for two brokers to go the way of SVS, and even more unlucky to end up with another ITI.

eskbanker

sweeter_strudel said:

eskbanker said:

sweeter_strudel said:

More important is would you survive if iWeb were inaccessible for 12+ months? This is perhaps when you should consider splitting investments between brokers. I wouldn't make one a trading account and the other dull but worthy long term holdings but try and mix asset types to have a balance between each. Otherwise you may discover you have to rely on a trading account to pay your electricity bill, or buy food.

Anyone who is tying money up in investments that could be needed for essential day-to-day expenditure within a year or two is running a significant and avoidable risk - quite apart from the question of broker stability, it is far more prudent to use readily-accessible cash deposit accounts for such money rather than potentially needing to sell at inopportune moments....

Esk, the concern was how to mitigate the impact of another SVS  scenario.
You may initially be paying the routine bills out of a handy cash savings account, but after several months of this whilst an investment remains inaccessible you may hit financial hardship. It would probably take one large unexpected bill to ruin the figures in your spreadsheet projecting your household spending.

To be honest, the same principle applies for holding an emergency fund, i.e. this should be in readily accessible cash form rather than tied up in investments.  When newbie investors post on this board expressing enthusiasm for getting stuck into investing, they're always advised to ensure they have adequate accessible cash savings first.

However, I take your point that splitting investments over multiple platforms mitigates this risk to a certain extent too, although it could still leave investors needing to sell when prices aren't suitable....

My2penneth

I had an email from ITI this morning ( blaming iWeb for not replying).
I actually had a communication from Crapital!  

A rare rare event indeed. 

sweeter_strudel

My2penneth said:

I had an email from ITI this morning ( blaming iWeb for not replying).
I actually had a communication from Crapital!  

A rare rare event indeed. 

Perhaps this deserves a quick print out on A4, a plain but wide oak frame, a bit of stiff white card neatly cut with a craft knife and large piece of glass.

Find the household hammer, a small nail or picture hook and then hang it somewhere suitable to commemorate the moment.

Perhaps somewhere it catches the eye just prior to arrival at the door of the toilet?

My2penneth

                                         
                                                            *******          IN CASE OF EMERGENCY   *********
                                                                               ****** BREAK GLASS ******

sweeter_strudel

My2penneth said:

                                         
                                                            *******          IN CASE OF EMERGENCY   *********
                                                                               ****** BREAK GLASS ******

The ITI Crapital sh1te of the last six months was worth tolerating simply to behold the positioning of your unexpected communication.

I salute you My2p

My2penneth

er....now slightly used!