How to recover shares from busted brokers

RobHT

Hello,

I've read something online, but I didn't come up with a clear procedure on how to do so, or what info to preserve in case that happens.

In UK, it seems regulated as every other country, with these important points though:
- Up to 85k coverage for your cash between standard and non-standard account, for example an ISA account.
- Your shares are not covered with the limit above, they are already protected by your ownership, the problem is that your broker buys the shares for you, so if your broker loses track of these data, you are done...

For the moment, I keep track of my records of buy/sell activity, not always about the ownership because not every broker allows you to download that kind report ondemand, in the best case scenario they send you a statement by email in the end of the month... 

Anything else I can do to avoid a loss?
I started to have a lot of money invested in different brokers, I can't quite imagine to lose my precious shares  

masonic

RobHT said:

- Your shares are not covered with the limit above, they are already protected by your ownership, the problem is that your broker buys the shares for you, so if your broker loses track of these data, you are done...

Not true. I suggest you do some reading. Perhaps from a better source such as the FSCS website: https://www.fscs.org.uk/what-we-cover/investments/

If a broker fails, then you would not be making an FSCS claim in respect of cash balances as these are not held by the broker (unless they are also a bank). You would only have a claim if some of your money had been improperly taken by the broker. In exactly the same way, you'd have an FSCS claim if some of your shares were missing. This would all come under the £85k compensation limit you mention.

If a broker is so negligent or malicious that they destroy the records of what each client holds, then it is unlikely that any personal records you keep will be taken as proof of your holding. They will generally turn to specialist forensic accounting services, some administrators have these services in house. Contract notes are worth downloading and keeping though, as well as an up to date summary of your holdings. You may be asked to confirm that your holdings are correct and without any records you'd just be guessing.

RobHT said:

Anything else I can do to avoid a loss?
I started to have a lot of money invested in different brokers, I can't quite imagine to lose my precious shares

One thing you can do is avoid spreading your money around too many brokers. Doing so will lead you into the more obscure and niche companies, which are more likely to fail than the large established ones, and more likely to have "record keeping issues".

AskAsk

i had started to worry about loss recently when i heard people say that it could take years to get your money back if the broker goes under.

i invest with HL and they produce transaction notes when a deal is done, which you can download.  i haven't done this for my ISA and SIPP account and have only done for the taxable account as I need that for my tax return.  i guess i should start downloading them now that you mention this!

i was looking to split my investment to another platform but people seem to say that HL is quite secure so there isn't really a need to do this and that if i did so, i would actually increase the risk of loss as other brokers are not as secure as HL.

still thinking about it and haven't yet come to a conclusion as there doesn't seem to be a lot of choice out there similar to HL for security.

RobHT

masonic said:

RobHT said:

- Your shares are not covered with the limit above, they are already protected by your ownership, the problem is that your broker buys the shares for you, so if your broker loses track of these data, you are done...

Not true. I suggest you do some reading. Perhaps from a better source such as the FSCS website: https://www.fscs.org.uk/what-we-cover/investments/

If a broker fails, then you would not be making an FSCS claim in respect of cash balances as these are not held by the broker (unless they are also a bank). You would only have a claim if some of your money had been improperly taken by the broker. In exactly the same way, you'd have an FSCS claim if some of your shares were missing. This would all come under the £85k compensation limit you mention.

If a broker is so negligent or malicious that they destroy the records of what each client holds, then it is unlikely that any personal records you keep will be taken as proof of your holding. They will generally turn to specialist forensic accounting services, some administrators have these services in house. Contract notes are worth downloading and keeping though, as well as an up to date summary of your holdings. You may be asked to confirm that your holdings are correct and without any records you'd just be guessing.

RobHT said:

Anything else I can do to avoid a loss?
I started to have a lot of money invested in different brokers, I can't quite imagine to lose my precious shares

One thing you can do is avoid spreading your money around too many brokers. Doing so will lead you into the more obscure and niche companies, which are more likely to fail than the large established ones, and more likely to have "record keeping issues".

Thank you.
Is it the 85k limit for the worth of my shares (+ cash obviously), or by the money I've spent to purchase them?

I have records of my number of shares, but I don't have a record signed by the company, let me explain.
1. HL gives me the contract note, it's crystal clear, no issues there.
2. T212 gives me nothing unless an useless email about the stocks that I own for both accounts (standard and ISA), it comes automatically each month, but you can't download it, you can only download ondemand the history of buy/sell, which is a bit different and it's more tricky to track down with many stocks due to the way the report is compiled...
3. I'm quite scared about a review from HMRC, ok I'm not so rich, but they can always knock the door with the will to know me better , you know, I can't refuse... If I give these crappy reports to them, !!!!!!, I don't think they are gonna like it...
There's can be a chance that I can ask T212 to give me a specific report, but they can easily send me to the hell and close my account, apparently brokers are able to close your account and f... off your shares outside the ISA just if they want to do so... Not sure how much power they have with an ISA account...
I've heard many stories about it, but obviously I couldn't verify them personally.

I don't have intention to use crappy brokers, I use the ones approved by FSCS, but they differ a lot each other, certain try to hold you with absurd fees if you leave, some is a balance of it, some it's partially free, some it's simply expensive to use and not good if you make many transactions.
In fact I use HL for few transactions and T212 for 200-400 transactions per year...

RobHT

AskAsk said:

i had started to worry about loss recently when i heard people say that it could take years to get your money back if the broker goes under.

i invest with HL and they produce transaction notes when a deal is done, which you can download.  i haven't done this for my ISA and SIPP account and have only done for the taxable account as I need that for my tax return.  i guess i should start downloading them now that you mention this!

i was looking to split my investment to another platform but people seem to say that HL is quite secure so there isn't really a need to do this and that if i did so, i would actually increase the risk of loss as other brokers are not as secure as HL.

still thinking about it and haven't yet come to a conclusion as there doesn't seem to be a lot of choice out there similar to HL for security.

Thanks for the answer, we are on the same boats for the doubts  

HL seems rock solid, it would be a surprise to see that broker cracked down, it's also the one to holds most of the investments in UK based on money spent from the users.
Considering that they offer you the contract note, always review them and preserve them carefully.
I don't think that you make many transactions with them, it would be too expensive, so I guess that you won't have an headache to retrieve your contract notes.

Regarding the importance of this task, imagine if you had to retrieve a contract note of 15 years ago, with a significant difference in the exchange rate  
Preserving such info is crucial and that's our boring job.

masonic

RobHT said:

masonic said:

RobHT said:

- Your shares are not covered with the limit above, they are already protected by your ownership, the problem is that your broker buys the shares for you, so if your broker loses track of these data, you are done...

Not true. I suggest you do some reading. Perhaps from a better source such as the FSCS website: https://www.fscs.org.uk/what-we-cover/investments/

If a broker fails, then you would not be making an FSCS claim in respect of cash balances as these are not held by the broker (unless they are also a bank). You would only have a claim if some of your money had been improperly taken by the broker. In exactly the same way, you'd have an FSCS claim if some of your shares were missing. This would all come under the £85k compensation limit you mention.

If a broker is so negligent or malicious that they destroy the records of what each client holds, then it is unlikely that any personal records you keep will be taken as proof of your holding. They will generally turn to specialist forensic accounting services, some administrators have these services in house. Contract notes are worth downloading and keeping though, as well as an up to date summary of your holdings. You may be asked to confirm that your holdings are correct and without any records you'd just be guessing.

RobHT said:

Anything else I can do to avoid a loss?
I started to have a lot of money invested in different brokers, I can't quite imagine to lose my precious shares

One thing you can do is avoid spreading your money around too many brokers. Doing so will lead you into the more obscure and niche companies, which are more likely to fail than the large established ones, and more likely to have "record keeping issues".

Thank you.
Is it the 85k limit for the worth of my shares (+ cash obviously), or by the money I've spent to purchase them?

The value of the shares around the time you are compensated for your loss.

RobHT said:

I have records of my number of shares, but I don't have a record signed by the company, let me explain.

I record signed by a failed company isn't worth very much, particularly if the company's accounting is in question and there are discrepancies between the electronic records and actual shares held in the nominee account.

RobHT said:

I have records of my number of shares, but I don't have a record signed by the company, let me explain.
1. HL gives me the contract note, it's crystal clear, no issues there.
2. T212 gives me nothing unless an useless email about the stocks that I own for both accounts (standard and ISA), it comes automatically each month, but you can't download it, you can only download ondemand the history of buy/sell, which is a bit different and it's more tricky to track down with many stocks due to the way the report is compiled...

That's the difference between a large highly reputable provider and a niche start-up.

RobHT said:

3. I'm quite scared about a review from HMRC, ok I'm not so rich, but they can always knock the door with the will to know me better , you know, I can't refuse... If I give these crappy reports to them, !!!!!!, I don't think they are gonna like it...

There's can be a chance that I can ask T212 to give me a specific report, but they can easily send me to the hell and close my account, apparently brokers are able to close your account and f... off your shares outside the ISA just if they want to do so... Not sure how much power they have with an ISA account...
I've heard many stories about it, but obviously I couldn't verify them personally.

HMRC will generally accept a self-compiled excel spreadsheet if you are declaring capital gains. They have the power to pull your transaction information from the provider if they suspect you have not given them an accurate record. All FCA authorised brokers have to treat customers fairly, and you can complain if they don't, including referring a complaint to the Financial Ombudsman Service. Closing your account in retaliation for a customer requesting an account statement would certainly result in a complaint being upheld, compensation for any financial loss, upset and distress, and the account being reinstated.

RobHT said:

I don't have intention to use crappy brokers, I use the ones approved by FSCS, but they differ a lot each other, certain try to hold you with absurd fees if you leave, some is a balance of it, some it's partially free, some it's simply expensive to use and not good if you make many transactions.
In fact I use HL for few transactions and T212 for 200-400 transactions per year...

The FSCS does not approve anyone. The FCA does that, and being FCA authorised does not mean a broker is not 'crappy'. From what you've said T212 is a case in point. SVS Securities was FCA authorised too, and it got shut down, leaving customers unable to access their investments for the best part of a year, with some investors finding some of their shares went walkabout. Hence my comment to stick to large established players if you want a robust record of your investments and transactions, and the assurance you could easily get the information you need if HMRC comes knocking.

AlanP_2

AskAsk said:

still thinking about it and haven't yet come to a conclusion as there doesn't seem to be a lot of choice out there similar to HL for security.

Fidelity and Vanguard immediately come to mind, as does HSBC. Personally, I wouldn't be concerned about A J Bell, IWeb or II either.

wmb194

OP, T212 emails me a contract note for every trade. You could also take screenshots from your transaction history.

Albermarle

AlanP_2 said:

AskAsk said:

still thinking about it and haven't yet come to a conclusion as there doesn't seem to be a lot of choice out there similar to HL for security.

Fidelity and Vanguard immediately come to mind, as does HSBC. Personally, I wouldn't be concerned about A J Bell, IWeb or II either.

Yes , on a global scale , HL is a small operation compared to the first three you mention .

RobHT

AlanP_2 said:

AskAsk said:

still thinking about it and haven't yet come to a conclusion as there doesn't seem to be a lot of choice out there similar to HL for security.

Fidelity and Vanguard immediately come to mind, as does HSBC. Personally, I wouldn't be concerned about A J Bell, IWeb or II either.

Vanguard has only their funds, that's why I don't use it, it may be good in the future if I want to buy some of their funds, but it's not for now... Plus you need to invest every month if I remember well, no way  

RobHT

wmb194 said:

OP, T212 emails me a contract note for every trade. You could also take screenshots from your transaction history.

Yes I get that, but when you do 200-400 transactions in the financial year, it's a mess... In any case, I can download the report if I want to, it's very clear, but I can't download a file that states my current share ownership... I compile it manually and it doesn't include the share price average, which could be a problem for HMRC, imagine if T212 goes busted and I need to workoud my taxes in a short period of time, without the price average it's extremely painful. I get that this is something I can do manually, but it's an hell of a job...

Plus due to my trades, it happens that I buy and sell the same stock 2-3 times each year... That's where the challenge is, imagine this for 50 stocks that I trade in average...
It seems I'm doing advanced stuff with simple tools, hence, the exponential manual job required