What does the FSCS £85k compensation cover for Sharedealing ISAs?

eskbanker

scg1889 said:
Thanks. I thought it was in case the banks went bust and something that had been put in place (or bolstered) since the Financial Crises in 2008? The FSCS site states "If your bank or building society fails and can’t pay back your money"

That quote relates to deposited cash, where the bank or building society actually has your money. The FSCS protection for investments (where the company offering investment services doesn't typically hold your money as such) is a separate and more complex provision, explained at https://www.fscs.org.uk/what-we-cover/investments/

scg1889

Linton said:

ctdctd said:

I think the coverage also applies to uninvested cash with the platform - so if you'd sold and were waiting for a market dip to reinvest, the cash would be covered up to the FSCS limit if the platform went bust.

I think you will find that just like shares and OEICs. the cash is held separately from the platform company and so should not be affected if that company went bust.

For example HL say:
All client money is held by us on trust and is segregated from our own funds in accordance with the FCA’s client money rules and guidance so that any creditors of Hargreaves Lansdown would have no legal right to it and we cannot use any of this money to cover Hargreaves Lansdown's obligations.

Also found this on HL which was useful:
Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £85,000 in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to 100% of the first £85,000

Albermarle

Thanks. I thought it was in case the banks went bust and something that had been put in place (or bolstered) since the Financial Crises in 2008? The FSCS site states "If your bank or building society fails and can’t pay back your money"

Yes but your question was not about banks or building societies. These institutions take your money and lend it to other people, sometimes recklessly , like RBS did. 

So if they do not get their money back and  after exhausting their reserves they can not pay you back . That is why the FSCS cover is important , although in reality failing banks or building societies usually get taken over .

An investment platform just takes your money and transfers it to your investment of choice . They are just a kind of middleman, there is no inherent risk . The only risk is fraud on a massive scale or massive incompetence. Either seems very unlikely with a mainstream platform .

scg1889

Albermarle said:

Thanks. I thought it was in case the banks went bust and something that had been put in place (or bolstered) since the Financial Crises in 2008? The FSCS site states "If your bank or building society fails and can’t pay back your money"

Yes but your question was not about banks or building societies. These institutions take your money and lend it to other people, sometimes recklessly , like RBS did. 

So if they do not get their money back and  after exhausting their reserves they can not pay you back . That is why the FSCS cover is important , although in reality failing banks or building societies usually get taken over .

An investment platform just takes your money and transfers it to your investment of choice . They are just a kind of middleman, there is no inherent risk . The only risk is fraud on a massive scale or massive incompetence. Either seems very unlikely with a mainstream platform .

Yeh sorry the banks bit I was referring to was really around the fact that my sharedealing account is with a bank. Thanks for that, gives me a bit warmer fuzzier feelings, had been toying with splitting between another platform to hold my shares to spread the risk but obviously that would incur extra fees but sounds like that may not be necessary

[Deleted User]

scg1889 said:

Albermarle said:

Thanks. I thought it was in case the banks went bust and something that had been put in place (or bolstered) since the Financial Crises in 2008? The FSCS site states "If your bank or building society fails and can’t pay back your money"

Yes but your question was not about banks or building societies. These institutions take your money and lend it to other people, sometimes recklessly , like RBS did. 

So if they do not get their money back and  after exhausting their reserves they can not pay you back . That is why the FSCS cover is important , although in reality failing banks or building societies usually get taken over .

An investment platform just takes your money and transfers it to your investment of choice . They are just a kind of middleman, there is no inherent risk . The only risk is fraud on a massive scale or massive incompetence. Either seems very unlikely with a mainstream platform .

Yeh sorry the banks bit I was referring to was really around the fact that my sharedealing account is with a bank. Thanks for that, gives me a bit warmer fuzzier feelings, had been toying with splitting between another platform to hold my shares to spread the risk but obviously that would incur extra fees but sounds like that may not be necessary

Shares are not covered (as somebody mentioned earlier)