S&S ISA Broker and FSCS

someone

I've been looking into what to do with my current growing in size S&S ISA at Vanguard Investor and was considering if the likes Lloyds or Halifax made sense. 

One thing that picked my interest and a possible detractor is around FSCS protection. The write up at the end of this table https://monevator.com/compare-uk-cheapest-online-brokers/ does not fully go into details about how FSCS can (and can not) protect.

> Check your trading platform is authorised by the FCA
> If your broker is authorised by the Financial Conduct Authority (FCA) then you may be entitled to compensation using the Financial Services Compensation Scheme (FSCS). Check from here by using the FCA register.
> Some trading platforms are owned by the same financial group. You do not diversify your risk by splitting assets across brands owned by the same group. Our investor compensation scheme guide (linked to above) explains how you can identify these brands.

Is there any real implication of having deposits with the high street bank + cash waiting to be invested + invested money in funds?

Is there a fact sheet anywhere the the key points in how FSCS coverage apply to brokers/dealing accounts?

[Deleted User]

Hi,

have a read here whilst waiting for a more knowledgable answer.

masonic

The main protection is against administrator fees if the provider becomes insolvent (administrators have the right to take their fees from client assets). Protection is also provided against fraud and FOS compensation awarded if the provider fails. As such, claims are unlikely to exceed the FSCS limit, even if your total assets held on the platform exceed the limit by several-fold.

As client assets and money are ringfenced from investment providers, it is quite a different situation from a deposit-taking bank, which can use your money to finance its activities.

Albermarle

You could spend some time scrolling through this forum as similar questions have been asked numerous times before .

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

someone

Thanks for the link to the previous thread but whilst interesting to does not appear to cover the situation I was referring to. My questions are really about how it interacts with say an existing deposit

Lets say there is a Bank Deposit with Halifax £80k. If one uses a S&S ISA with Halifax with £20k cash awaiting investment (as it might be at the start/end of the tax year) and £80k in Funds with say Vanguard. In the event of an event requiring FSCS what "pots" are at play. Is it one £85k pot for the cash (which means there is £15k unprotected)? Are they separate because of how the entities are set up? etc.

With bank deposits I fully understand that the pot is shared with multiple brands (e.g. Halifax and Bank of Scotland) but really unsure if they join up with the investment side.

At the heart of what I am trying to understand: is there any downside of having your Investment account (which may have a chunk of cash in from time to time as needed) with an organisation you have cash also deposited?

masonic

someone said:

Thanks for the link to the previous thread but whilst interesting to does not appear to cover the situation I was referring to. My questions are really about how it interacts with say an existing deposit

Lets say there is a Bank Deposit with Halifax £80k. If one uses a S&S ISA with Halifax with £20k cash awaiting investment (as it might be at the start/end of the tax year) and £80k in Funds with say Vanguard. In the event of an event requiring FSCS what "pots" are at play. Is it one £85k pot for the cash (which means there is £15k unprotected)? Are they separate because of how the entities are set up? etc.

With bank deposits I fully understand that the pot is shared with multiple brands (e.g. Halifax and Bank of Scotland) but really unsure if they join up with the investment side.

At the heart of what I am trying to understand: is there any downside of having your Investment account (which may have a chunk of cash in from time to time as needed) with an organisation you have cash also deposited?

The limits are separate. You get £85k protection for deposits in a bank that fails, and another £85k protection for losses that occur as a result of the same entity holding your investments. But, for example, Halifax Sharedealing and iWeb are the same FCA registered entity, so holding investment accounts with both would not increase the amount you could claim.

Albermarle

As I understand it if your investment broker has £20K of your cash held in say Barclays bank, and you have separately £80K in a Barclays bank account . If Barclays goes bust you are only covered for £85K so you would lose £15K . I think that is correct anyway .
Each platform uses different banks, some use three of four as far as I know ,