SVS Securities - shut down?

masonic

RasputinB said:

masonic said:  I expect anyone who has been following this thread will have acted by now if they will at all.

You are likely correct but in my view it is still too early to put in a final claim. One reason is because of the continuing issues at ITI.

As I understand it, there were broadly two groups of investors embroiled in this situation, those that wished to get away from ITI as soon as possible (hopefully all have been successful by now), and those that were lured in by the price matching and decided to stick around for a while. The first group, assuming they did get away, have no reason to delay pursuing their complaint based on the overall experience, while the second group are quite entitled to pursue the complaints about the migration to ITI, ongoing issues experienced while at ITI, and the experience of leaving when they finally do see sense, as they arise. It is not necessarily a bad thing to do this, and FOS can help to apply pressure for ongoing issues to be resolved if engaged at a time prior to the end game.

It is also pertinent to mention that you only have 6 months from receiving a final response from the business to put in a claim to the FOS. You don't have a great deal of control over when the business issues the final response, but it will not be more than 8 weeks after you initially complain to the business. If you decide to subject yourself to months of problems at the hands of the business without bringing this to their attention or giving them an opportunity to put it right for you, then I can't imagine that would be viewed very favourably by the FOS. They could take it as being opportunistic, to maximise the perceived impact in order to obtain a larger compensation amount. A general principle is that you should act where possible in a way that reduces the impact an issue has on you.

masonic

RasputinB said:

DRN-3112315 at Ombudsman decisions (financial-ombudsman.org.uk)

WisdomTree Physical Silver is an Exchange-Traded Commodity (ETC) which has the ISIN JE00B1VS3333 and a base currency of USD

A Fact Sheet on this fund is available at WisdomTree.eu.

It shows that the PHSP Exchange Ticker is for the GBP version of this fund and PHAG is the Exchange Ticker for the USD version.

The ombudsman refers to "ETF Security (PHSP)" and as shown above, this would be the GBP denominated version.

The complaint was that "ITI changed her British Pounds (GBP) Exchange-Traded Fund (ETF) to a US Dollars (USD) ETF without her permission or consent".

The investigator was "satisfied that ITI has demonstrated that ETF Security (PHSP) was already in USD when it was migrated from the previous platform to ITI".

From what I have found I think that statement is incorrect as if it "was already in USD" it would have had the ticker PHAG, not PHSP.

The ombudsman said -

"Based on what ITI says, on balance it seems more likely (than not) the ETF Security (PHSP) was held in USD, prior to the take-over by ITI. So, it would be reasonable to expect that’s how the transfer would take place. I note in addition to providing screenshot of the holdings on the day of the migration, ITI says: “This was received from (the previous provider) on 23 June 2020, you will see that it was received and held on the account as USD”.

Despite what Mr J says, in the circumstances, and on balance, I think it would be unreasonable to ask ITI to convert the USD to GBP. I’m mindful that despite what Ms J and Mr J say, neither have provided any evidence that the EFT Security (PHSP) was previously held in GBP."

But surely if the holding had the ticker symbol PHSP it was held in GBP and if transferred to ITI in USD it would have had the ticker symbol PHAG?

I think it much more likely that this ETC was in GBP at SVS and when transferred it reverted to the default USD version, or it was converted for the convenience of SVS or ITI.

This was not necessarily to the detriment of Mr J but does raise an interesting issue.

An issue that relates to other WisdomTree holdings (of which there were about 88 in total); and to all other assets that may have incurred an undisclosed currency change.

It's not uncommon for ETF/ETCs that available on multiple exchanges and in multiple trading currencies to have some overlap between ticker symbols. To prove which version was held at SVS, all that would be needed is a relevant contract note. This would identify the precise financial instrument by ISIN. Job done. It is therefore unfortunate that Mr J didn't provide this evidence, or ask someone about the matter who could have helped him back up what he was saying with evidence.

The matter of whether a conversion from one class to another would have been permissible as a necessary element of the transfer is another matter. I find it hard to believe the GBP version was unavailable at ITI.

eskbanker

RasputinB said:

I think it much more likely that this ETC was in GBP at SVS and when transferred it reverted to the default USD version, or it was converted for the convenience of SVS or ITI.

This was not necessarily to the detriment of Mr J but does raise an interesting issue.

An issue that relates to other WisdomTree holdings (of which there were about 88 in total); and to all other assets that may have incurred an undisclosed currency change.

Are you basing that opinion solely on the FOS using the ticker symbol for the GBP version instead of the USD one?  I'd suggest that it's as least as likely to be the ombudsman (who also erroneously labels it as an 'EFT') erring in using the same symbol for both versions in the mistaken belief that it's a generic descriptor - note that this is the same ombudsman who published a rather mangled description of the other case discussed at length over the past few pages!

As ever, we're not seeing the full picture when reading the summarised decisions, and it would appear that ITI were able to supply screenshot data that supported their case (perhaps the cynic might contend forgery....) while the complainant was seemingly unable to produce anything to support her assertion that SVS held the GBP variant, which should have been evidenced by contract notes, statements, etc.  Obviously there's some scepticism about the basis of some FOS decisions, but when all is said and done, they're the ones who actually see the evidence presented, and make a judgement call about which of two contradictory versions is more credible, so perhaps the lesson is for all investors to ensure that they retain sufficient documentary proof of their holdings?

RasputinB

eskbanker said:
I wonder if they recognise time spent pursuing the issue being complained about, but not for actually making the complaint itself?

That would make sense. I'll try to remember this point and if I am ever in a similar situation I'll keep a record of my time and costs in resolving the issue separate from those relating to dealing with the complaint.

RasputinB

eskbanker said:

RasputinB said:

I think it much more likely that this ETC was in GBP at SVS and when transferred it reverted to the default USD version, or it was converted for the convenience of SVS or ITI.

This was not necessarily to the detriment of Mr J but does raise an interesting issue.

An issue that relates to other WisdomTree holdings (of which there were about 88 in total); and to all other assets that may have incurred an undisclosed currency change.

Are you basing that opinion solely on the FOS using the ticker symbol for the GBP version instead of the USD one?  I'd suggest that it's as least as likely to be the ombudsman (who also erroneously labels it as an 'EFT') erring in using the same symbol for both versions in the mistaken belief that it's a generic descriptor - note that this is the same ombudsman who published a rather mangled description of the other case discussed at length over the past few pages!

As ever, we're not seeing the full picture when reading the summarised decisions, and it would appear that ITI were able to supply screenshot data that supported their case (perhaps the cynic might contend forgery....) while the complainant was seemingly unable to produce anything to support her assertion that SVS held the GBP variant, which should have been evidenced by contract notes, statements, etc.  Obviously there's some scepticism about the basis of some FOS decisions, but when all is said and done, they're the ones who actually see the evidence presented, and make a judgement call about which of two contradictory versions is more credible, so perhaps the lesson is for all investors to ensure that they retain sufficient documentary proof of their holdings?

Are you basing that opinion solely on the FOS using the ticker symbol for the GBP version instead of the USD one?
No, but I do think it pretty convincing as the ticker for the default version is PHAG.
When my assets were with ITI there was a mysterious change in the currency status for one or two holdings which was rectified when they went to new custodians. The information in this decision suggests to me that, at the time of the transfer from SVS, some assets reverted to default currencies. I don't know why this would have happened but think it might have been due to the transfer process. With these WisdomTree holdings they might have been transferred in a block as JE00B1VS3333 when if they had been transferred as client holdings under ticker PHSP etc. they would have been more likely to retain the currency version.
In an ideal situation ITI would have clarified with each holder. For those of us without an associated USD account I think it would have been pretty obvious that we would expect any dividends etc. to be in GBP.
Those resident in the UK might suffer added complications due to having to convert to GBP for their tax returns.
Irrespective of whether or not ITI were at fault for transfers coming to them in a way that lost the currency status they should have flagged up the issue and advised any affected clients accordingly.
[Edited to add - the claimant might have decided not to bother to provide further evidence if the change from GBP to USD was an advantage if the value of GBP against USD had fallen, or was thought likely to fall.]

masonic

RasputinB said:

When my assets were with ITI there was a mysterious change in the currency status for one or two holdings which was rectified when they went to new custodians. The information in this decision suggests to me that, at the time of the transfer from SVS, some assets reverted to default currencies. I don't know why this would have happened but think it might have been due to the transfer process. With these WisdomTree holdings they might have been transferred in a block as JE00B1VS3333 when if they had been transferred as client holdings under ticker PHSP etc. they would have been more likely to retain the currency version.
In an ideal situation ITI would have clarified with each holder.

When a customer is engaged in an arranged in specie transfer to a different provider, these issues are normally communicated up front. Sometimes a holding must be submitted for a conversion to a different class of the same instrument in order to be held at the gaining platform. It is not that the customer can choose, but they could decline the transfer entirely. In this case the customer would not be at liberty to decline the transfer of their account, but I agree with you that being informed of the change is a reasonable expectation, if indeed such a change happened.

RasputinB said:

For those of us without an associated USD account I think it would have been pretty obvious that we would expect any dividends etc. to be in GBP.
Those resident in the UK might suffer added complications due to having to convert to GBP for their tax returns.
Irrespective of whether or not ITI were at fault for transfers coming to them in a way that lost the currency status they should have flagged up the issue and advised any affected clients accordingly.

The trading currency of the ETF is irrelevant when it comes to the payment of dividends. Dividends are normally distributed in the base currency of the ETF, which for PHSP is USD. At SVS, these would have been converted to GBP by SVS (with some forex conversion charge) before being paid to the investor's account. If Mr J is asserting that the holding is PHAG just because he is now receiving dividends in USD, then that is an erroneous inference. He is now receiving dividends in USD because ITI permit this to happen without an enforced currency conversion, whereas SVS did not.

RasputinB

masonic said:

RasputinB said:

When my assets were with ITI there was a mysterious change in the currency status for one or two holdings which was rectified when they went to new custodians. The information in this decision suggests to me that, at the time of the transfer from SVS, some assets reverted to default currencies. I don't know why this would have happened but think it might have been due to the transfer process. With these WisdomTree holdings they might have been transferred in a block as JE00B1VS3333 when if they had been transferred as client holdings under ticker PHSP etc. they would have been more likely to retain the currency version.
In an ideal situation ITI would have clarified with each holder.

When a customer is engaged in an arranged in specie transfer to a different provider, these issues are normally communicated up front. Sometimes a holding must be submitted for a conversion to a different class of the same instrument in order to be held at the gaining platform. It is not that the customer can choose, but they could decline the transfer entirely. In this case the customer would not be at liberty to decline the transfer of their account, but I agree with you that being informed of the change is a reasonable expectation, if indeed such a change happened.

RasputinB said:

For those of us without an associated USD account I think it would have been pretty obvious that we would expect any dividends etc. to be in GBP.
Those resident in the UK might suffer added complications due to having to convert to GBP for their tax returns.
Irrespective of whether or not ITI were at fault for transfers coming to them in a way that lost the currency status they should have flagged up the issue and advised any affected clients accordingly.

The trading currency of the ETF is irrelevant when it comes to the payment of dividends. Dividends are normally distributed in the base currency of the ETF, which for PHSP is USD. At SVS, these would have been converted to GBP by SVS (with some forex conversion charge) before being paid to the investor's account. If Mr J is asserting that the holding is PHAG just because he is now receiving dividends in USD, then that is an erroneous inference. He is now receiving dividends in USD because ITI permit this to happen without an enforced currency conversion, whereas SVS did not.

My apologies if I have confused matters. eskbanker asked me if was basing my opinion solely on the use of the ticker symbol and I explained that a couple of my assets had a changed currency status. It was this that resulted in dividends not being received in the expected currency. I've not yet got up to speed on this but so far my research suggests that where there is an option for dividends to be paid in a different currency an instruction is evergreen. For example if you hold Hikma Pharmaceuticals Plc (Ticker HIK.L) the default currency for dividends is in USD. You can elect to have dividends paid in GBP and once that election has been made the registrar will only change it at the shareholder’s request. See https://www.hikma.com/media/2090/181023-dividend-faqs.pdf

It follows that holders of Hikma at SVS who had chosen to receive their dividends in GBP should still have received them in GBP after transfer. If “ownership” had changed then they might have reverted to the default currency of USD but SVS (LC) and / or ITI should have advised if this is what happened.

In my case there was a shortfall in expected dividends and I am still waiting for ITI to explain. It might be because the dividends were received in USD and converted by them to GBP. If so this should be clear from accurate account statements; which ITI haven’t yet provided.

masonic

RasputinB said:

masonic said:

RasputinB said:

When my assets were with ITI there was a mysterious change in the currency status for one or two holdings which was rectified when they went to new custodians. The information in this decision suggests to me that, at the time of the transfer from SVS, some assets reverted to default currencies. I don't know why this would have happened but think it might have been due to the transfer process. With these WisdomTree holdings they might have been transferred in a block as JE00B1VS3333 when if they had been transferred as client holdings under ticker PHSP etc. they would have been more likely to retain the currency version.
In an ideal situation ITI would have clarified with each holder.

When a customer is engaged in an arranged in specie transfer to a different provider, these issues are normally communicated up front. Sometimes a holding must be submitted for a conversion to a different class of the same instrument in order to be held at the gaining platform. It is not that the customer can choose, but they could decline the transfer entirely. In this case the customer would not be at liberty to decline the transfer of their account, but I agree with you that being informed of the change is a reasonable expectation, if indeed such a change happened.

RasputinB said:

For those of us without an associated USD account I think it would have been pretty obvious that we would expect any dividends etc. to be in GBP.
Those resident in the UK might suffer added complications due to having to convert to GBP for their tax returns.
Irrespective of whether or not ITI were at fault for transfers coming to them in a way that lost the currency status they should have flagged up the issue and advised any affected clients accordingly.

The trading currency of the ETF is irrelevant when it comes to the payment of dividends. Dividends are normally distributed in the base currency of the ETF, which for PHSP is USD. At SVS, these would have been converted to GBP by SVS (with some forex conversion charge) before being paid to the investor's account. If Mr J is asserting that the holding is PHAG just because he is now receiving dividends in USD, then that is an erroneous inference. He is now receiving dividends in USD because ITI permit this to happen without an enforced currency conversion, whereas SVS did not.

My apologies if I have confused matters. eskbanker asked me if was basing my opinion solely on the use of the ticker symbol and I explained that a couple of my assets had a changed currency status. It was this that resulted in dividends not being received in the expected currency. I've not yet got up to speed on this but so far my research suggests that where there is an option for dividends to be paid in a different currency an instruction is evergreen. For example if you hold Hikma Pharmaceuticals Plc (Ticker HIK.L) the default currency for dividends is in USD. You can elect to have dividends paid in GBP and once that election has been made the registrar will only change it at the shareholder’s request. See https://www.hikma.com/media/2090/181023-dividend-faqs.pdf

It follows that holders of Hikma at SVS who had chosen to receive their dividends in GBP should still have received them in GBP after transfer. If “ownership” had changed then they might have reverted to the default currency of USD but SVS (LC) and / or ITI should have advised if this is what happened.

In my case there was a shortfall in expected dividends and I am still waiting for ITI to explain. It might be because the dividends were received in USD and converted by them to GBP. If so this should be clear from accurate account statements; which ITI haven’t yet provided.

An individual company share will probably differ in that respect vs an exchange traded fund. In that case such an arrangement could be lost in the process of a re-registration to a new nominee and would need to be resubmitted. At the shareholder register level, shares held by a nominee are fungible, so could not be tracked to a specific beneficial owner. I would not be at all surprised if information like this is routinely lost when assets are transferred between nominees in bulk. It would be easier to keep track for an individual in specie account transfer. Whether LC should have been experienced enough to have anticipated that and send out a general warning to clients I don't know.

I do not think this would be applicable to Mr J's ETF holding, however. I'm not aware of the major fund houses making such arrangements with individual shareholders. They will receive their income from underlying holdings and keep it in their cash account of a specific currency ready to distribute at the appropriate time. The choice of currency will often be made based on the currency in which the majority of the income is received, so as to minimise forex costs.

In any case, it seems I'm half asleep, otherwise I'd have noticed a little sooner that a silver ETC is not going to be making any distributions!

RasputinB

Recently added to Ombudsman decisions (financial-ombudsman.org.uk)
DRN-3325384 - £350 D&I payment. ITI offered £200

johnburman

Well done RasputinB. This is an important decision from the ombudsman on the damages awarded for pure inconvenience and where there is no pecuniary loss, only frustration and inconvenience 

£350 is still small. It's worth iti and other FS companies not improving their services when they screw up as the costs of improving will be far less than the comp they need to offer 

But £350 is now the standard on the facts and that is the baseline figure to be asked for