SVS Securities - shut down?

[Deleted User]

"Fortunately in the regulated platform failure scenario, you get your Macdonalds  seven months after a conversation with the manager, and the cloakroom finds your coat, possibly with the belt missing and the pockets empty" - 
There, fixed that for you eskbanker. 

masonic

Granted, 7 months is a long time to be without the ability to switch investments and/or receive dividends. There are measures that could have been put in place to alleviate this problem. The FCA had been working on firms having "living will arrangements", and a fully funded wind down plan, as well as movement towards their being a "backup service provider" who could continue to service accounts when the provider's operating company got into difficulties.

Unfortunately all of the above contradicted insolvency law and therefore couldn't lawfully be enforced in the event a company enters administration. So the only way to make things better is for Parliament to change the law.

snipkin

Thank you ZingPowZing and JohnBurman (for example) who have expressed very clearly my own thoughts - I have 'enjoyed' reading the (sometimes emotional) recent discussions which have livened up this board - refreshing after the generally sober, calm and patient comments usually posted. I guess anger gets us nowhere - but I sure feel it and my frustration that there seems little that can be done and that things will trundle on slowly and deadlines may be out back and back as so far has happened... I hope the latest estimate of access to our shares being 'April/May' (that means May, possibly June...?) sticks but I do not have that much confidence in it.
As I have said before the so-called 'ring-fencing' of broker share dealing accounts needs to be looked at. How can there can be any suspicions that share holdings might have somehow 'disappeared'? (has anyone found a discrepancy in their holdings with their statements on the online claims portal I wonder? - mine was fine). There are obviously insufficient safeguards in this area of 'ring-fencing'. There should be a system in place where the whole XO part of a broking business can be transferred with little delay to another broker in any of these cases of broker failure or dodgy dealings (and SVS is by no means the only event like this in recent times). Why should we have to wait for the best part of a year to access our shares again when we have done nothing wrong? Except for not doing our 'due diligence' - I accept that - but I never imagined a scenario like with SVS could occur. I clearly did not understand the whole nominee system and put too much faith in it -.and I class myself as a well-informed investor - I read the financial pages and never saw any mention of SVS - and there has been little comment the main stream press - probably 'too small'  a matter to deal with. But perhaps letters tor the press suggesting they investigate this whole area of nominee share investing (unavoidable for ISA share accounts I believe) might lead to something being done? Not sure a letter to my MP would elicit anything (not even a reply from what I hear). Well, I had tens of thousands of pounds with Icesave, and thousands with The Enhanced Zero Investment Trust (remember that? - it went bust), and I have had at least three of the utility companies I used go bust, and luckily closed an account with Hoodless Brennan brokers before they went bust... I do seem to pick them! I now have around 200K invested via SVS XO. On the plus side, I have always got my money back - so far... 
Google "sharesoc Law Commission Review of Intermediated Securities Consultation" to read an item which is partly about this problem (if I understand it correctly: "problems in the current ways that shares are owned and the difficulties of voting, receiving information and exercising ownership rights.") with a long list of of other failures (includes SVS in the list under "Investors did not own shares. Expensive liquidation and delays").  I remember reading this article which seemed to mirror my experience (google it): "'I came home from holiday to find my £111,000 savings had gone missing'"...

masonic

ZingPowZing said:

As for doing my own research on stockbrokers and sharing my findings: I have been with Rowan Dartington for the best part of twenty years. They wouldn’t be for everyone, because their commission is high. Which is not to say I feel any sense of superiority to those who chose low cost options like SVS. Sometimes I dine in good restaurants, sometimes I choose Macdonalds. What I don’t expect from the Macdonalds experience is to be held culpable if the person taking my order pockets my money and runs away. Similarly, if I go to the theatre and leave my coat in the cloakroom, I do expect it to be there when I come back.
I don’t think that’s a high expectation.

I agree with johnburman on the reputation of SJP and here_to_eternity regarding boutique providers. There's nothing wrong with paying for a premium service, and under the auspices of SJP, Rowan Dartington is unlikely to go the way of SVS, but as a matter of principle I wouldn't deal with a SJP subsidiary given their exploitative nature and poor reputation.

Incidentally, I'd consider SVS XO a mid-priced offering. They were competitive in the days prior to them splitting into advisory and XO, but their fee hike made them more expensive than the likes of iWeb, Jarvis and others, and even pricier than HL under some situations. The current crop of Macdonalds-like brokers are Degiro, Trading212, Freetrade etc. While I could see the attraction for anyone with a small portfolio taking the counterparty risk with such providers, investors with portfolios in the hundreds of thousands would need their heads read if they considered going with one of these, just IMHO of course.

masonic

snipkin said:

Except for not doing our 'due diligence' - I accept that - but I never imagined a scenario like with SVS could occur. I clearly did not understand the whole nominee system and put too much faith in it -.and I class myself as a well-informed investor - I read the financial pages and never saw any mention of SVS - and there has been little comment the main stream press - probably 'too small'  a matter to deal with.

You can see from the early responses in the thread, it came as something of a surprise to everyone and prompted several regulars here to reconsider their position with regard to investment providers, including myself.

Interesting though that it seemed to attract less press than Beaufort - perhaps the novelty had worn off at this point.

But perhaps letters tor the press suggesting they investigate this whole area of nominee share investing (unavoidable for ISA share accounts I believe) might lead to something being done? Not sure a letter to my MP would elicit anything (not even a reply from what I hear).

Don't be put off by the thought your MP might not respond to you. In the other matter I am involved with, I have it on good authority that a wide range of MPs in constituencies across the country have taken up the matter on behalf of those who have taken the trouble to take that step. You have nothing to lose.

Well, I had tens of thousands of pounds with Icesave, and thousands with The Enhanced Zero Investment Trust (remember that? - it went bust), and I have had at least three of the utility companies I used go bust, and luckily closed an account with Hoodless Brennan brokers before they went bust... I do seem to pick them! I now have around 200K invested via SVS XO. On the plus side, I have always got my money back - so far... 

Do let us know who you decide to go with next so we can take appropriate steps...

Thrugelmir

ZingPowZing said:

"Fortunately in the regulated platform failure scenario, you get your Macdonalds  seven months after a conversation with the manager, and the cloakroom finds your coat, possibly with the belt missing and the pockets empty" - 
There, fixed that for you eskbanker. 

Unfortunately there's little one can do about fraud. The stock market darling Polly Peck , Maxwell Publishing, Guiness (share trading scandal), Patisserie Valerie all share one thing in common. No one saw what was coming. Nor is "big"securer. The fraud is simply on a different scale. If people collude then the fraud can be hidden. Often until the cash finally runs out and the company simply cannot continue to trade any longer. 

The process that follows is long and drawn out. Little can be done about that. 

[Deleted User]

masonic - I'm not recommending Rowan Dartington over another broker. I share your disquiet about SJP but my relationship with individuals in RD goes back further. They promised me this week that, if ever they were to jump ship, they will give me notice so that I can transfer my stock.

And just reading the lines above reinforces how scandalous the UK situation is: £85k is a fig-leaf today when average pension transfers are four times as much. If this was America, investors would have been given access to holdings up to £400,000; probably in September '19. 

Thrugelmir

ZingPowZing said:

And just reading the lines above reinforces how scandalous the UK situation is: £85k is a fig-leaf today when average pension transfers are four times as much. 

Who pays the fund levy? 

masonic

ZingPowZing said:

And just reading the lines above reinforces how scandalous the UK situation is: £85k is a fig-leaf today when average pension transfers are four times as much. If this was America, investors would have been given access to holdings up to £400,000; probably in September '19. 

The £85k limit, when taken in the context of administrator's costs, gives quite good protection. In the case of Beaufort Securities, administrator costs were capped below this limit, and even if that were not the case costs are unlikely to exceed 5% of assets under management in simple cases, or 10% of AUM in complex cases such as Beaufort. So the vast majority of investors would be fully covered (those with non-pension or SIPP investments exceeding £800k might want to consider splitting them). There is no £85k limit for insured pension funds, protection is unlimited.

Edit: worth mentioning that the £85k limit was required of the UK by the EU. Prior to the EU requiring members to have a compensation scheme limited at a minimum standard of 100k EUR, the UK scheme was limited to 100% of the first £30k, and 90% of the next £20k to a total limit of £48k. Given the planned divergence from the EU after the end of this year, things could get worse.

[Deleted User]

I'll bow to your knowledge, masonic.
This being the case, why were qualifying SVS investors not reacquainted with their own assets at the outset of administration, last August?