Question about FSCS, Lloyds, and Halifax

Ricardo1980

Hello,

Currently I have a large amount of money (more than the FSCS limit) in S&S ISA at Halifax.
I just created another S&S ISA at Lloyds to move some of my shares from Halifax to Lloyds, just in case if any of these providers fails.
However, I just realised that Halifax Share Dealing is part of the Lloyds Banking Group.
Does this mean that if one of these 2 providers fail, I will not receive any compensation because they belong to the same company/group?

Another question I have about FSCS that is not clear to me.
I understand that if you have a deposit or cash, the compensation limit is about £85000, but what is not clear to me is when you have shares.
Let's imagine I have 300 Tesla shares in my ISA account. Its value is about £250,000, but that's not money, it is just a bunch of shares.
Should I request a shares certificate on paper or something like that just in case the provider fails and I have to claim in court that I am the owner of those shares?

Thanks a lot for your replies.

masonic

Ricardo1980 said:

Hello,

Currently I have a large amount of money (more than the FSCS limit) in S&S ISA at Halifax.
I just created another S&S ISA at Lloyds to move some of my shares from Halifax to Lloyds, just in case if any of these providers fails.
However, I just realised that Halifax Share Dealing is part of the Lloyds Banking Group.
Does this mean that if one of these 2 providers fail, I will not receive any compensation because they belong to the same company/group?

No it does not mean that, however it does mean that if your loss is greater than £85k then you would only receive £85k compensation. If Halifax Sharedealing fails, your loss will only be your share of the administration costs up to the point your account is transferred elsewhere, which is not going to be a large percentage of your assets and probably capped under the compensation limit. For a mainstream provider with good infrastructure, the transfer to another provider would be relatively straightforward and inexpensive.

Ricardo1980 said:

Another question I have about FSCS that is not clear to me.
I understand that if you have a deposit or cash, the compensation limit is about £85000, but what is not clear to me is when you have shares.
Let's imagine I have 300 Tesla shares in my ISA account. Its value is about £250,000, but that's not money, it is just a bunch of shares.
Should I request a shares certificate on paper or something like that just in case the provider fails and I have to claim in court that I am the owner of those shares?

No, if there was fraud resulting in your shares being lost, you'd be entitled to claim compensation for the value of those shares, they would normally be valued around the date you were able to submit your claim. If the provider goes bust then it is unlikely any of the shares they hold on your behalf will be missing. Pretty much zero probability with a mainstream provider like Halifax Sharedealing.

Ricardo1980

"If the provider goes bust then it is unlikely any of the shares they hold on your behalf will be missing."
That's exactly what I think, but when I read about FSCS I don't see anything about that or how to proceed.

MX5huggy

Forget about it as long as you are not holding £85,000 of cash in your account then you are the named owner of the shares and you won’t be claiming on FSCS, all you are doing by opening another trading account is adding more fees. 

Edi81

HSDL are not a deposit taking institution. Any shares held with them are segregated fully from their cash. No different than if you used HL for share dealing. 

masonic

Ricardo1980 said:

"If the provider goes bust then it is unlikely any of the shares they hold on your behalf will be missing."
That's exactly what I think, but when I read about FSCS I don't see anything about that or how to proceed.

It is quite simple really, if a platform "loses" your shares, they are responsible for putting you back into the situation you would have been in if they hadn't lost them. FSCS only kicks into action if they don't have the funds to repay your loss and are put into administration.

The last provider to go bust and lose some people's shares was SVS Securities. Around the time the FSCS opened for claims relating to SVS the shares, a date was set where the missing shares were valued using their current market price, and investors whose shares were missing were able to claim the relevant sum from the FSCS. Losses were spread between all holders of the relevant share in proportion to the number of shares each held. SVS was a niche provider and clearly had some issues with their platform. Significant providers with more robust systems and regulatory compliance are not going to end up with accounting discrepancies like that.

Ricardo1980

Thanks a lot for your replies.

I guess the same applies if I have a global index tracker in my SIPP provider, which is also in Halifax.

Albermarle

In reality I would be a lot more worried about my global index tracker or Tesla shares crashing ( perfectly possible ) than Halifax Share Dealing going bust ( extremely unlikely )