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Thrugelmir

AskAsk said:

jamesd said:

AskAsk said:

i would expect the money back in about 6 months as that is the timescale for the financial ombudsman to get round to sorting anything out.  a few years is a bit of a stretch.

why would the investors be charged?  they hold the investments and that is protected so that should go back to the investors.  all assets owned by investors would be readily available on the database as everything is recorded.  i always do my transactions online so there is always a record.  i can't remember if you can carry out transactions over the phone, but even if this was the case, it would still be recorded so it would be fairly simple to see who owns what.

You aren't going to get a penny until the administrator is sufficiently sure that you're going to finally get at least what they pay to you. That could take a long time, depending on the extent and nature of the issues which they have to resolve.

Investors pay because someone has to. Administrators aren't charities which work free of charge. If phone records are needed, someone will need to be paid to listen to the calls. If databases have been damaged or are incomplete someone has to be paid to sort out that mess, to the extent that it can be sorted out. While firms are required to reconcile cash daily, some firms didn't do it and have paid very large fines for their failures. They are undoubtedly not the last or only ones.

With a place like HL it's very likely that there would be a rapid takeover and return to normal service within a few weeks, but very likely isn't a guarantee.

investors assets with a broker are not assets that belongs to the broker so i don't see why that should be used to pay for the adminstration costs.

Who else is going to pay? When any company goes bust. The administrators are paid from the realised assets before the remainder is distributed to creditors. 

Thrugelmir

AskAsk said:

Thrugelmir said:

AskAsk said:

jamesd said:

AskAsk said:

i would expect the money back in about 6 months as that is the timescale for the financial ombudsman to get round to sorting anything out.  a few years is a bit of a stretch.

why would the investors be charged?  they hold the investments and that is protected so that should go back to the investors.  all assets owned by investors would be readily available on the database as everything is recorded.  i always do my transactions online so there is always a record.  i can't remember if you can carry out transactions over the phone, but even if this was the case, it would still be recorded so it would be fairly simple to see who owns what.

You aren't going to get a penny until the administrator is sufficiently sure that you're going to finally get at least what they pay to you. That could take a long time, depending on the extent and nature of the issues which they have to resolve.

Investors pay because someone has to. Administrators aren't charities which work free of charge. If phone records are needed, someone will need to be paid to listen to the calls. If databases have been damaged or are incomplete someone has to be paid to sort out that mess, to the extent that it can be sorted out. While firms are required to reconcile cash daily, some firms didn't do it and have paid very large fines for their failures. They are undoubtedly not the last or only ones.

With a place like HL it's very likely that there would be a rapid takeover and return to normal service within a few weeks, but very likely isn't a guarantee.

investors assets with a broker are not assets that belongs to the broker so i don't see why that should be used to pay for the adminstration costs.

Who else is going to pay? When any company goes bust. The administrators are paid from the realised assets before the remainder is distributed to creditors. 

but investors using a broker platform have not invested or lent the money to the platform.  they simply used their services to buy a product, like ebay or amazon for example, so their money should not be used to pay the administrators.  if ebay or amazon went under, whatever assets they own is used to pay the administrators and their customers are not asked to pay towards this.

The administrators will assume the day to day administration and running of the business. Without them your investments would remain locked. 

You didn't answer my question as to who should pay. 

eskbanker

In practice, when this has happened, FSCS has stepped in to cover the losses retail investors would have made....

https://www.fscs.org.uk/making-a-claim/failed-firms/svs/
https://www.fscs.org.uk/making-a-claim/failed-firms/beaufort/

Thrugelmir

AskAsk said:

Thrugelmir said:

AskAsk said:

Thrugelmir said:

AskAsk said:

jamesd said:

AskAsk said:

i would expect the money back in about 6 months as that is the timescale for the financial ombudsman to get round to sorting anything out.  a few years is a bit of a stretch.

why would the investors be charged?  they hold the investments and that is protected so that should go back to the investors.  all assets owned by investors would be readily available on the database as everything is recorded.  i always do my transactions online so there is always a record.  i can't remember if you can carry out transactions over the phone, but even if this was the case, it would still be recorded so it would be fairly simple to see who owns what.

You aren't going to get a penny until the administrator is sufficiently sure that you're going to finally get at least what they pay to you. That could take a long time, depending on the extent and nature of the issues which they have to resolve.

Investors pay because someone has to. Administrators aren't charities which work free of charge. If phone records are needed, someone will need to be paid to listen to the calls. If databases have been damaged or are incomplete someone has to be paid to sort out that mess, to the extent that it can be sorted out. While firms are required to reconcile cash daily, some firms didn't do it and have paid very large fines for their failures. They are undoubtedly not the last or only ones.

With a place like HL it's very likely that there would be a rapid takeover and return to normal service within a few weeks, but very likely isn't a guarantee.

investors assets with a broker are not assets that belongs to the broker so i don't see why that should be used to pay for the adminstration costs.

Who else is going to pay? When any company goes bust. The administrators are paid from the realised assets before the remainder is distributed to creditors. 

but investors using a broker platform have not invested or lent the money to the platform.  they simply used their services to buy a product, like ebay or amazon for example, so their money should not be used to pay the administrators.  if ebay or amazon went under, whatever assets they own is used to pay the administrators and their customers are not asked to pay towards this.

The administrators will assume the day to day administration and running of the business. Without them your investments would remain locked. 

You didn't answer my question as to who should pay. 

do the adminstrators keep the day to day running though? 

as to who should pay, whoever pays for other firms that go into administration, like the retailers that went bust.  the shoppers are not asked to pay for their administration costs.

The Directors will resign and the administrators will retain only the staff that it feels are neccessary. 

As for retail outlets. I can repeat what I said previously. "The administrators are paid from the realised assets before the remainder is distributed to creditors".  A shop will have stock that can be liquidated into hard cash. Also shop fixtures and fittings etc. 

A platform will have very little in the way of owned physical assets to realise. 

Linton

AskAsk said:

eskbanker said:

In practice, when this has happened, FSCS has stepped in to cover the losses retail investors would have made....

https://www.fscs.org.uk/making-a-claim/failed-firms/svs/
https://www.fscs.org.uk/making-a-claim/failed-firms/beaufort/

as HL is floated, i would guess the share holders and the bond holders will be the ones paying for the administration costs first before any money is asked from those just using the platform.

makes sense that the fscs pays for the administration costs.  comforting to hear.

No.  Once shares have been floated there is no link between the shares and the company.  The shares just move from one person to another.  So the administrator cannot get anything from  the shareholders.Nor can the creditors.

The bond holders (I dont know if HL have any) are creditors and have first pickings after the administrator alongside other creditors.

Thrugelmir

AskAsk said:

eskbanker said:

In practice, when this has happened, FSCS has stepped in to cover the losses retail investors would have made....

https://www.fscs.org.uk/making-a-claim/failed-firms/svs/
https://www.fscs.org.uk/making-a-claim/failed-firms/beaufort/

as HL is floated, i would guess the share holders and the bond holders will be the ones paying for the administration costs first before any money is asked from those just using the platform.

Shareholders and bondholders are owed money.  They have no further liabilities to the company themselves. Why companies are constructed in the form they are. Limited liability. 

jamesd

AskAsk said:

do the adminstrators keep the day to day running though? 

as to who should pay, whoever pays for other firms that go into administration, like the retailers that went bust.  the shoppers are not asked to pay for their administration costs.

Depends on the circumstances. I'm involved with two insolvent firms, in one case the platform is still operating, in the other it isn't (and the owners sought to destroy records).Both P2P rather than share/fund platforms.

Whether you think investors should pay is moot. If nobody else can pay, the court is going to order that the investors pay because not doing it would do more harm to the investors than doing it. Hopefully it'll be covered by the FSCS and free to investors, though. That isn't the case with either of the firms I'm involved with because the FSCS doesn't cover that type of investment. The FCA also says that firms should have enough to cover run-down costs but that doesn't always happen either.

Investors pay is bad, it's just that the alternatives are worse if all that's left to pay is the investors.

Malthusian

AskAsk said:

as HL is floated, i would guess the share holders and the bond holders will be the ones paying for the administration costs first before any money is asked from those just using the platform.

makes sense that the fscs pays for the administration costs.  comforting to hear.

Yes in a way, although as others have said, neither the shareholders nor the bond holders will be paying any money that they haven't already handed over.

As the administrator has first call on any money left in the business, followed by bondholders then shareholders (ignoring "preferential creditors" to keep it simple), effectively the shareholders pay first, then the bondholders.

As a last resort the investors would pay - and the FSCS will step in to cover that loss.

The only alternative to the investors paying for administration (and then being compensated by the FSCS) is that the investors would all have to go to court individually to have their shareholdings transferred from the ashes of HL into their individual names - which isn't going to happen.

In the Beaufort Capital collapse, individual investors' shares of the administration costs were capped at £10,000. That means that a platform collapse would have to be 8.5 times worse than Beaufort (in terms of costs of the administration, minus cash left in the business, as a share of investors' holdings) to result in losses to investors.

Even if that was possible, I suspect the Government would step in to ensure individual investors did not lose money, otherwise confidence in retail investments would collapse. It could only happen with colossal regulatory failure so it would be justified.

Sledger

Albermarle said:

AskAsk said:

I have all my investment with Hargreaves Lansdowne as I think they are quite safe as a broker.  If they go under, my investments should still be fine right?  As they are held in investments so if HL goes under, I would still own those investments?Correct 

So the danger would be if they don't actually buy the investments and just pocket your money and pretend you have those investments, or they sell them and don't let you know. Correct  This would be fraud and I understand that the FSCS protects you in these circumstance up to 85k but anything above this limit is not protected.Correct

Any thoughts?  I don't really like the idea of using more than one broker but may be I should think about this?

Thoughts are that it seems highly unlikely that large scale  fraud of such kind could take place in a large respected organisation like HL, without it being noticed . If some small scale fraud happened , or more likely some admin/IT blunder than I am sure HL would move quickly to compensate anybody affected .

Albermarle said:

AskAsk said:

I have all my investment with Hargreaves Lansdowne as I think they are quite safe as a broker.  If they go under, my investments should still be fine right?  As they are held in investments so if HL goes under, I would still own those investments?Correct 

So the danger would be if they don't actually buy the investments and just pocket your money and pretend you have those investments, or they sell them and don't let you know. Correct  This would be fraud and I understand that the FSCS protects you in these circumstance up to 85k but anything above this limit is not protected.Correct

Any thoughts?  I don't really like the idea of using more than one broker but may be I should think about this?

Thoughts are that it seems highly unlikely that large scale  fraud of such kind could take place in a large respected organisation like HL, without it being noticed . If some small scale fraud happened , or more likely some admin/IT blunder than I am sure HL would move quickly to compensate anybody affected .

I raised this Q on H&L active Savings accounts where each are FSCS 85K compensated.
If any of those individual banks fail I will get the FSCS Compensation, and it will go back to H&L which will end up back to me. That I understand and is therefore safe.

However, if H&L were to fail and go into administration, I have approached one of the Banks as to the scenario of what happens to my 85K funds deposited via H&L and where do the Bank return them on maturity if H&L failed as there is no reference to it coming from me as its deposited by H&L. Never got a clear answer from the Bank and if H&L went under will likely get the Data Protection act ruling and my 85K may go into the H&L administration pot on maturity.  If I hold only a single 85K active saving account, the FSCS will compensate me if H&L collapsed as H&L  are under their scheme so no issues. But If I have several 85K deposits made via H&L to various Banks I suspect the FSCS would not put a block on my money going back to H&L neither would the individual banks entertain me. I approached H&L on this and got a form of reassurance but is still unclear if I had 2 x85K active savings accounts as to the scenario and don't want to put this answer to the test if that were to happen. I am still reluctant to exceed putting in excess of 85K with H&L and look at what the banks rates are offering on the H&L active savings account and approach the Banks direct. H&L rates maybe slightly higher than offered by the individual Banks but going direct investing 85K max in individual banks will give me peace of mind.   

H&L response "  
As your money is held by the bank or building society who provides the product, it will not be affected if we go out of business and will still be covered by the FSCS. But it may take longer to get back than if it was saved directly with the bank or building society.

Unfortunately I wouldn't be able to disclose the process again for the same reasons as previously stated but please be assured, in any of these instances we would provide detailed correspondence on any procedure needed to be undertaken.