SVS Securities - shut down?

johnburman

juliamarsh has made a very important post. The last two sentences of the letter need to be repaeated:

If an FCA authorised adviser that’s still trading advised you to invest through SVS, you need to complain to them. If your adviser rejects your complaint, you can take your complaint to the Financial Ombudsman Service (FOS).

If an FCA authorised adviser that’s now not trading advised you to invest through SVS, you’ll be able to submit a claim to FSCS against them.

If I were in that position - I am an XO client and am not - I would make a complaint/claim NOW.

englishmas

I thought that for claiming the losses due to miss selling or given the wrong advise by an adviser one has to go through FCA, via ombudsmen. FSCS only deals with the short fall in the investment due to liquidation.
May some one there can put more light on this

johnburman

To respond to Englishmas it is clear th esteps you take depend on what you are claiming:

A If an FCA authorised adviser that’s still trading advised you to invest through SVS, you need to complain to them. If your adviser rejects your complaint, you can take your complaint to the Financial Ombudsman Service (FOS).

OR


If an FCA authorised adviser that’s now not trading advised you to invest through SVS, you’ll be able to submit a claim to FSCS against them.

So it depends.

I will tell you a secret though. As an XO client I was unaware that SVS were *advising* anybody to do anything. We just bought and sold shares.ETFs ourselves, making are own decisions. I did not evenknew that they had a FX offering, and were active in China. They seemed to keep this separate from their XO clients and XO website.

englishmas

Thanks for your response and explains it.
In case of SVS if one claim the losses to FSCS on the ground of bad advise, I presume the process will be the same as with FCA.
FSCS has to decide the compensation case by case and it will not be easy.

snipkin

Background article: 'When Two UK Brokers Go Bust in One Month, Whose Fault is That? UK investors, at least those with big portfolios, are on the hook if their broker fails' on financemagnates.com.

AS I have said before there should be warnings (like with building societies) not to invest more than £85,000 with any one broker using the nominee accounts system.

And the whole thing about "ring fencing" needs to be tightened up - there is, in effect, very little "ring fencing" when anyone owed money can take it out of our accounts. SVS was not just a failure of a company but willful bad practice by some of its staff and as such we should not be asked to pay one penny of the costs. I wonder if the perpetrators will just get away scot free? Who knows?

I am now in the position of having to pay overdraft fees because I cannot access my investments.

englishmas

You are right it is frighting to know how unsafe UK based brokers are.
But what one can do , I am sorry to say nothing.
I use X-O (Jarvis) and AJ Bell, I did asked them that how safe my accounts are , they reassured me that in case the company going under, all their account holder assist are ring fenced and identifiable and no way mixed up with their own company holding.
The risk is always there ,one can reduce it by going with the big boys. but mighty can fall too.
So either put you life saving for rainy days under the mattress or as they say spend it , enjoy the present.

johnburman

Snipkin 's posr referred to an interesting article. The full link to it is here https://www.financemagnates.com/forex/analysis/when-two-uk-brokers-go-bust-in-one-month-whose-fault-is-that/

masonic

snipkin wrote: »

Background article: 'When Two UK Brokers Go Bust in One Month, Whose Fault is That? UK investors, at least those with big portfolios, are on the hook if their broker fails' on financemagnates.com.

AS I have said before there should be warnings (like with building societies) not to invest more than £85,000 with any one broker using the nominee accounts system.

Why? Under what reasonable or precedented scenario would someone with say £100,000 invested through SVS lose out? Bank deposits are a very different kettle of fish. They are not ring-fenced. Banks will help themselves to your deposits and lend them to other customers, invest them, use them as if they were business assets, etc. That's why you need to be wary of going over the FSCS limit with a bank: if a bank goes bust it is very likely there will be nothing left of your money. Whereas if an investment firm goes bust, as we have seen with SVS, all client assets will very likely be ringfenced and accounted for.

You might take the conservative position that nobody should hold all of their investments, especially if they need to access some of those investments within a few years, with a single provider. But that's a hedge against a liquidity risk, and that would apply whether you had £10,000 or £100,000 invested. It is sensible not to hold all of the assets you may need in the short term in one place. When investing them in stocks, then there are other risks that could see you unable to access your investment in the short term.

And the whole thing about "ring fencing" needs to be tightened up - there is, in effect, very little "ring fencing" when anyone owed money can take it out of our accounts. SVS was not just a failure of a company but willful bad practice by some of its staff and as such we should not be asked to pay one penny of the costs. I wonder if the perpetrators will just get away scot free? Who knows?

That is simply not true. If I was a supplier of SVS who hadn't been paid, I'd have zero claim over the assets of SVS clients. If I was an employee with unpaid wages, I'd have zero claim over the assets of SVS clients. If I was the taxman trying to collect unpaid VAT from SVS, I'd have zero claim over the assets of SVS clients. If I were a enforcement officer trying to enforce a court judgement against SVS, I'd have zero claim over the assets of SVS clients.

There is one small exception to the above, which is set out deliberately in law, and that is for the administrators themselves to deduct the costs of their work from client assets (fully refundable by the FSCS up to the limit of £85k per client). This is so that clients will eventually regain access to their investments, rather than them being left in limbo for an indefinite period because it would make no commercial sense for administrators to take on a case when there was no money to pay them.

In previous instances where costs have been taken by the administrators of a failed investment firm, those costs have been capped below the FSCS compensation limit - and for those with portfolios many times over the FSCS limit, that's well worth remembering and campaigning for should it become necessary.

pafpcg

snipkin wrote: »

Background article: 'When Two UK Brokers Go Bust in One Month, Whose Fault is That? UK investors, at least those with big portfolios, are on the hook if their broker fails' on financemagnates.com.

I tried to follow the arguments made by the article, but I failed! Perhaps because the article is written for FX (currency) traders, much of what was written was irrelevant for those of us as clients of SVS X-O where we used SVS as a platform to trade equities and to hold the equity investments in a nominee account.

For example, one quote in the article "Indeed, under the FSCS, the vast majority of clients should normally expect to receive back any client money and custody assets in full" simply echoes what the SVS administrators (LC) have already promised the SVS clients. But any article which purports to offer an authoritative view should not include statements such as "......., the FSCS announced earlier this year that those hit by financial losses are eligible for recompense through the FSCS, which covers investments up to the value of £85,000." FSCS does NOT limit investments - it covers losses up to £85,000. So an investment portfolio which suffered a 100% loss would be covered only up to £85,000, but a 1% loss on an investment portfolio of £8million would still be covered!

I wasn't impressed by the meandering thread in this article - I wouldn't trust it for any form of financial guidance. Perhaps FX traders' brains are wired differently?

englishmas

What I understand from the above discussion that XO account holders are relatively safe provided the broker is FCS approved.

What about Advisory account holders as I believed there were many with the SVS.