Security of investments and cash held by nominee companies

maxsteam

Please don't think that I am standing up for SVS. I am just pointing to an example of what to expect after a broker goes into administration and I stand by what I wrote in that it's important to choose a good broker. I looked at a FSCS document dated November 2019 and erroneously took this as the date of administration. The date they went into administration was, in fact, 5 August 2019. I apologise for my error. Anyone who infers that the whole process is far too slow will have my wholehearted support.

Albermarle

Reaper said:

peter021072 said:

If they distribute it across ten banks an individual could be covered for £850,000.  If they use only a few, and those are where you have other savings and investments (directly or through a nominee) the cover could be a tenth of that. 

There is no rule that says a broker must use a single bank or split it across multiple, so you will have to check with your broker what their policy is. 

For example Hargreaves Landsdown say they use a "panel of institutions" but I would not automatically assume that means they split your money between them. They may well allocate your money to a single bank from their panel. You would have to ask.

If you have a large amount of cash with HL , they would not put more than £85K of it with any one bank .
https://www.hl.co.uk/about-us/cash
I know the platform I use does not have such a system , but just three banks . I guess they are all a bit different.

wmb194

If it helps I know of one broker that states explicitly that it will only hold cash with one bank and that's Barclays Smart Investor, formerly known as Barclays Stockbrokers. Three guesses which bank it holds all its customer deposits with...

Thrugelmir

If banks were to become insolvent then there would be far more to worry about than my investments. The GFC of 2006-2008 was the sea change event that has removed the entire concept of light touch regulation. Replaced with an entire raft of supervision and regulation , and even to this day ever demanding capital requirements etc. Twelve years on the job isn't yet complete. 

masonic

The most significant risks when holding large amounts of cash with an investment firm is the investment firm going bust or the investment firm being defrauded. Failure of the bank(s) they have chosen to deposit the cash into is way down the list. I'd therefore derive little reassurance from the number of banks being used to hold client money.