ISA Protection/Safeguards

ZoomInZoomOut

Hello,

As I understand it with most ISA investment platforms you are protected upto £85k via the FSA if the business goes bust, but what about other situations?

If I invest into an ISA what are the protections in place if say you get hacked?

A lot of these ISAs are managed via the web e.g. Vanguard, etc...

If you get hacked is basically tough luck?

There is risk wit investments going up and down, but to lose everything via fraud, etc... That really worries me. How can we mitigate such risk?

eskbanker

Investment platforms will typically allow withdrawals only to nominated and verified bank accounts, but sensible and generic risk mitigations should be sufficient, as with anything else managed online, such as strong passwords, not disclosing anything to third parties, don't open unfamiliar emails or texts and click on any links in them if you do, ensure devices are adequately secured and kept up to date, regularly scan for viruses and malware, etc, etc.

https://www.getsafeonline.org/information-security/take-five-to-stop-fraud/

ZoomInZoomOut

I never knew about the bank account. Does this cover transfers too?

It will be the biggest store of money outside of property and the prospect of it going walkabout is scary.

masonic

The only way anyone could transfer your ISA to another provider would be to open an account in your name using your NI number, and pass the other ISA provider's Know Your Customer and fraud checks (which invariably involves receiving something to your verified address in the post), then produce a signed transfer form that your existing provider would be sent for verification. You would be notified by your existing provider that the transfer had been requested and there would generally be time to stop it if it was fraudulent, and there would also be liability on the new provider for allowing a fraudster to open an account in your name.

So, not very likely.

dunstonh

As I understand it with most ISA investment platforms you are protected upto £85k via the FSA if the business goes bust, but what about other situations?

It is not the FSA. it is the FSCS.    However, do note that your investments are ringfenced.   And its also £85k per fund house as a secondary level on the funds.

If I invest into an ISA what are the protections in place if say you get hacked?

None if its your fault.
However, platforms will normally validate accounts before paying withdrawals.  Such as only paying to the same account you wrote the cheque on. Or you sending in a bank statement.  Some use the electronic records to validate bank details.

A lot of these ISAs are managed via the web e.g. Vanguard, etc...

Virtually all modern ones are nowadays.

How can we mitigate such risk?

The biggest risk is you.   

Thrugelmir

ZoomInZoomOut said:

There is risk wit investments going up and down, but to lose everything via fraud, etc... That really worries me. How can we mitigate such risk?

Companies go bust as well. Losing money on investments isn't diffficult if you chose the wrong ones. 

ZoomInZoomOut

Food for thought guys!

Thank you kindly!

csgohan4

Don't forget the FCA will not compensate you generally for bad investments you make, there are exceptions but few and far

ZoomInZoomOut

csgohan4 said:

Don't forget the FCA will not compensate you generally for bad investments you make, there are exceptions but few and far

I assume you mean if I invest 100K but in 5 years its worth 90k I can't complain?

This I understand. That is why I intend to use a balanced portfolio managed by those who know much more than me. I won't be picking my own stocks and shares!

My main concern was that fact that it could pottentially be a huge store of money for me and I don't want it to simply get stolen via fraud!

Another_Saver

Aside from the platform FSCS protection, think about what it would take for say your Vanguard stocks & shares ISA to be defrauded. Someone would have to login as you and change your bank account, address, maybe even your name, sell all your holdings and withdraw them. Each one of those layers would raise flags at Vanguard and they put numerous administrative hurdles in your way to make this difficult. You would receive an email at every step, maybe post. They would want to verify your identity, and you've probably already given them photos of your passport, driving license and bank statements. If the amount is large, they may stop or flag the withdrawal with the police and go through further identity verification. Finally, you would be a victim of fraud, able to get a CRN number and potentially Vanguard or the FSCS would be liable to compensate you if it was no fault of your own, you could also go to your mp, the courts, the financial ombudsman, Vanguard have pretty good customer service and complaints handling, or even the media or Joe Lycett as a last resort.
Vanguard are the second largest asset manager in the world, they've been around since the 70s, they have layers of redundancy and security, contingency plans, backup offices, they've adjusted to the new norm and all the major asset managers will have employees or consultants trying to keep them ahead of emerging threats.
And what if Vanguard rip you off. Well firstly there are systems, regulations, rules and processes to make that next to impossible. They are owned by 20-30 million Americans, and if they can't even agree to have faith in an election result how can they agree to defraud their UK subsidiary's investors?

I wander how this post will age, maybe like the Captain of the Titanic saying it's unsinkable, or the banks saying they were too big to fail.

ZoomInZoomOut

Hahaha! Excellent points made there Another_Saver!

I'm certainly more at ease with the whole fraud/phisihing scam side of things now.

Just need to decide my apitite for risk! I read China will be overtaking US by 2028 for economy size. Wonder if we will see stocks and shares shift to the east?

Cheers all!