How much is covered by uk government if Investment house goes bust

ChilliBob

I've only really considered the big ones mentioned on here - iweb, ii, Fidelity, hl,etc. I'm sceptical of the torro thing you see all over busses and not sure on trading 212.

Yeah I think that was the point I was making above regarding loss, if a global tracker had near total loss that's surely Armageddon! 

Thrugelmir

HL is a FTSE 100 company. iweb is part of Halifax which is part of Lloyds bank. 

dunstonh

Apodemus said:

Albermarle said:

...it would probably mean WW3 had just happened and your investments would be the last thing on your mind.

You are right, of course, but that is exactly what my FI said to me when convincing me to take out an endowment mortgage in 1989!

Endowments were not affected by companies going bust.  They were affected by the change in the UK economy (and global economy) which brought inflation down significantly and interest rates with it.     Stockmarket returns net of inflation are broadly similar to what they have been in the past.   However, gross of inflation, they are much lower.   Endowments were built to hit target as long as the annual return exceeded a certain amount.  If the target amount was set at a level that was based on 1960s or 1970s style returns, then it would have fallen short as that returns are not met.      
Endowments were not a failure in investment returns.  They were a failure in taking into account that things change.  A failure in complency and having an option that was rigid and unable to adapt.
So, very different from an insurer or investment house or platform failing.

Bartoni79

Thanks for the comments. Can I ask why ETFs wouldn't be covered by the FCIS. I was of the understanding that a company i.e Vanguard buys a basket of stocks (ETF) and sell a piece of this index to customers who buy into that? My thinking is that if Vanguard goes bust, the stocks will still be physically owned by Vanguard or the administrator?
Is this something to be concerned about or is the chance of this low i.e. like HSBC going bust?

Thrugelmir

dunstonh said:

Apodemus said:

Albermarle said:

...it would probably mean WW3 had just happened and your investments would be the last thing on your mind.

You are right, of course, but that is exactly what my FI said to me when convincing me to take out an endowment mortgage in 1989!

Endowments were not affected by companies going bust.  They were affected by the change in the UK economy (and global economy) which brought inflation down significantly and interest rates with it.    

Nikkei collapse blew a hole through the value of investments. Never to recover. 

dunstonh

Can I ask why ETFs wouldn't be covered by the FCIS.

Because they are not a packaged retail investment.  They are traded on exchanges, like shares.   Their structure is legally different.   

My thinking is that if Vanguard goes bust, the stocks will still be physically owned by Vanguard or the administrator?

But ringfenced under an arrangement that means they are allocated to the investor.

Is this something to be concerned about or is the chance of this low i.e. like HSBC going bust?

If you stick to the mainstream and use profitable platforms then it's a very very low chance of happening.   

Apodemus

dunstonh said:

Apodemus said:

Albermarle said:

...it would probably mean WW3 had just happened and your investments would be the last thing on your mind.

You are right, of course, but that is exactly what my FI said to me when convincing me to take out an endowment mortgage in 1989!

Endowments were not affected by companies going bust.  They were affected by the change in the UK economy (and global economy) which brought inflation down significantly and interest rates with it.     Stockmarket returns net of inflation are broadly similar to what they have been in the past.   However, gross of inflation, they are much lower.   Endowments were built to hit target as long as the annual return exceeded a certain amount.  If the target amount was set at a level that was based on 1960s or 1970s style returns, then it would have fallen short as that returns are not met.      
Endowments were not a failure in investment returns.  They were a failure in taking into account that things change.  A failure in complency and having an option that was rigid and unable to adapt.
So, very different from an insurer or investment house or platform failing.

Dunston, my comment wasn't meant as a serious comparison between the endowment business and the stock market, just that the oft-used phrase "if XXX fails then its because we have bigger problems and you won't be worrying about XXX" in my mind is on a par with "this time it is different". 

idkwhattosay

El_Torro said:

If the investment company is just holding stocks and shares for you then assuming the investment company goes bust you still own those shares.

Do you really? AFAIK in 9/10 cases you can't get a paper certificate, which is really the only legal document proving share ownership in a company. When you buy a share it needs to be registered in your name and you get some voting rights as well, but I don't think that's how it works. I think when you "buy" shares they will be registered in some financial company's name, not yours. So if the company goes bust, how will the government recover your shares? The government can recover the amount of money lost, but not share ownership. Somebody correct me?

NottinghamKnight

idkwhattosay said:

El_Torro said:

If the investment company is just holding stocks and shares for you then assuming the investment company goes bust you still own those shares.

Do you really? AFAIK in 9/10 cases you can't get a paper certificate, which is really the only legal document proving share ownership in a company. When you buy a share it needs to be registered in your name and you get some voting rights as well, but I don't think that's how it works. I think when you "buy" shares they will be registered in some financial company's name, not yours. So if the company goes bust, how will the government recover your shares? The government can recover the amount of money lost, but not share ownership. Somebody correct me?

Yes, you are wrong. Most people will hold their investments in funds, so the fund house will have a record of ownership as well as the platform. Those funds will hold underlying investments such as shares and bonds, so that if the fund house goes under then you still hold the fund and the underlying assets. You should be getting a transaction record when you purchase so that is your evidence and record.

Sorcerer2018

Also worth noting that if the investment fund house goes bust and has no money of their own left. The administrators have the legal right to take your money as their fees and pay you what is left over. So they could sell your shares, use some of it for their wages and pay you the rest.