How to recover shares from busted brokers

RobHT

maxsteam said:

You should keep, as a minimum, a record of the brokers whom you have an account with in a drawer and you should mention to close family that there are important documents in that drawer. Adding an annual statement every year is a good idea.

My opinion is that the danger that is bigger than a broker going bust without leaving proper records is the shareholder dying without the executors being aware of all the nominee accounts.

Right...
One worst thing is if you don't login for aprox 3 months, banks and brokers will delete your account...
That's way more scary

I hope that they dont' take the bag full of money, maybe they just disable the account login...

masonic

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

No only the administrators appointed to manage the failed broker can do that. Their fees will be apportioned between all clients. For a large reputable broker with good records and who isn't involved in complex/illiquid investments as well as listed shares, it is highly unlikely the per client fee would exceed £85k (and has previously been capped well below that level). It's also possible that some of that £85k would be needed to cover "missing" investments when the nominee account is reconciled, so you might need to claim for more than just administrator costs.

The FSCS £85k limit applies across your assets held with the broker. In the highly unlikely scenario you weren't eligible for FSCS protection, or you exhausted the £85k limit, you'd usually be given options for payment of the fees, sale of shares being one choice available to you.

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

masonic

RobHT said:

maxsteam said:

You should keep, as a minimum, a record of the brokers whom you have an account with in a drawer and you should mention to close family that there are important documents in that drawer. Adding an annual statement every year is a good idea.

My opinion is that the danger that is bigger than a broker going bust without leaving proper records is the shareholder dying without the executors being aware of all the nominee accounts.

Right...
One worst thing is if you don't login for aprox 3 months, banks and brokers will delete your account...
That's way more scary

I hope that they dont' take the bag full of money, maybe they just disable the account login...

That sounds scary, but which bank/broker actually does that? None that I've ever used.

coyrls

masonic said:

RobHT said:

maxsteam said:

You should keep, as a minimum, a record of the brokers whom you have an account with in a drawer and you should mention to close family that there are important documents in that drawer. Adding an annual statement every year is a good idea.

My opinion is that the danger that is bigger than a broker going bust without leaving proper records is the shareholder dying without the executors being aware of all the nominee accounts.

Right...
One worst thing is if you don't login for aprox 3 months, banks and brokers will delete your account...
That's way more scary

I hope that they dont' take the bag full of money, maybe they just disable the account login...

That sounds scary, but which bank/broker actually does that? None that I've ever used.

Never heard of this either.

GeoffTF

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation? If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect. Tendentially, they would sell my shares instead of taking my cash?

No. It is illegal for a broker to sell your shares to raise cash to cover up a shortfall elsewhere. Brokers rarely hold banking licences, even if they are owned by banks. (IIRC TD Waterhouse, which became TD Direct was an exception.) The have to deposit your money with a panel of banks. That money is covered by those banks own compensation limits. The broker will be holding some client cash, but will not be allowed to hold it for long. The situation is essentially what I said, but the details are (as usual) more complicated.

GeoffTF

masonic said:

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

Trading 212 has an AUM of £3 billion, compared with £73 billion for AJ Bell, the smaller of the two quoted brokers. Nonetheless, it would have to do something very bad indeed for all but the largest clients not be be fully covered by the FSCS. You could, however, get locked out of your account for up to a year, or possibly more, if it went into administration. Nonetheless, if they are indeed not providing proper records of purchases and sales, I would not touch them with a barge pole.

wmb194

GeoffTF said:

masonic said:

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

Trading 212 has an AUM of £3 billion, compared with £73 billion for AJ Bell, the smaller of the two quoted brokers. Nonetheless, it would have to do something very bad indeed for all but the largest clients not be be fully covered by the FSCS. You could, however, get locked out of your account for up to a year, or possibly more, if it went into administration. Nonetheless, if they are indeed not providing proper records of purchases and sales, I would not touch them with a barge pole.

T212 supplies contract notes by email. It's not an issue.

masonic

GeoffTF said:

masonic said:

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

Trading 212 has an AUM of £3 billion, compared with £73 billion for AJ Bell, the smaller of the two quoted brokers. Nonetheless, it would have to do something very bad indeed for all but the largest clients not be be fully covered by the FSCS. You could, however, get locked out of your account for up to a year, or possibly more, if it went into administration. Nonetheless, if they are indeed not providing proper records of purchases and sales, I would not touch them with a barge pole.

Yes, the record keeping is where I'd have most concern. If for example, you had invested a large sum in an investment few others held, and that share was subject to an imbalance in the nominee account, you could end up with an unexpectedly high loss. For a real world example, there was discussion in the SVS thread about there being an imbalance in Pets At Home shares (among others). The hit each investor took in that case was 15% of their holding (see https://forums.moneysavingexpert.com/discussion/comment/77140407/#Comment_77140407 ). That's a fairly popular (amongst private investors) FTSE250 share, so a significantly worse outcome is within the realms of possibility. Very dependent on client behaviour/diversification, but in the death throes of a broker, many trades could be placed that end up in default of the market in question, and with T212 doing off-exchange trades too, the waters could be quite muddied.

Being locked out for a protracted period of time is also a potential source of loss (with no compensation available). If someone is making 200-400 trades per year, then perhaps being locked into lots of short-term positions could be quite detrimental (although it might equally lead to better returns over the long term).

GeoffTF

masonic said:

GeoffTF said:

masonic said:

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

Trading 212 has an AUM of £3 billion, compared with £73 billion for AJ Bell, the smaller of the two quoted brokers. Nonetheless, it would have to do something very bad indeed for all but the largest clients not be be fully covered by the FSCS. You could, however, get locked out of your account for up to a year, or possibly more, if it went into administration. Nonetheless, if they are indeed not providing proper records of purchases and sales, I would not touch them with a barge pole.

For a real world example, there was discussion in the SVS thread about there being an imbalance in Pets At Home shares (among others). The hit each investor took in that case was 15% of their holding (see https://forums.moneysavingexpert.com/discussion/comment/77140407/#Comment_77140407 ). That's a fairly popular (amongst private investors) FTSE250 share, so a significantly worse outcome is within the realms of possibility.

Is that what was finally applied by the FCA? I read that only one SVS investor lost money. SVS had only about £200 million AUM. I had not realised that losses were spread across just the holders of share where there was a shortfall. I thought that they would usually be spread proportionately across all the investors, which would dilute the impact much more.

Beaufort had huge administrators fees, but they spread the fees equally (not proportionately) across all the accounts, and no one lost out. Beaufort had been caught in an FBI sting, and the FCA had twiddled its thumbs for about 18 months before taking action in that case.

masonic

GeoffTF said:

masonic said:

GeoffTF said:

masonic said:

RobHT said:

GeoffTF said:

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?

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...

Compensation for cash deposits is separate from that for investments. In the case of cash, there is compensation for the first £85K of the deposit. Your investments have to be ring fenced by law, but if the platform goes bust the administrators can take your share of their fees from your investments. There is compensation for the first £85K of any shortfall.

So you are saying that to cover its face, a broker may sell my shares to cover the damage, if beyond 85k evaluation?
If I understood well, this come after the protection of 85k held in cash in the account, but 85k is always the total of financial value between shares/options and cash that they need to protect.

Tendentially, they would sell my shares instead of taking my cash?

Note that I wouldn't necessarily consider T212 to be a "large reputable broker with good records", so keeping your assets there under £85k would be advisable, as you'd never be asked to pay more than the total value of the assets under management.

Trading 212 has an AUM of £3 billion, compared with £73 billion for AJ Bell, the smaller of the two quoted brokers. Nonetheless, it would have to do something very bad indeed for all but the largest clients not be be fully covered by the FSCS. You could, however, get locked out of your account for up to a year, or possibly more, if it went into administration. Nonetheless, if they are indeed not providing proper records of purchases and sales, I would not touch them with a barge pole.

For a real world example, there was discussion in the SVS thread about there being an imbalance in Pets At Home shares (among others). The hit each investor took in that case was 15% of their holding (see https://forums.moneysavingexpert.com/discussion/comment/77140407/#Comment_77140407 ). That's a fairly popular (amongst private investors) FTSE250 share, so a significantly worse outcome is within the realms of possibility.

Is that what was finally applied by the FCA? I read that only one SVS investor lost money. SVS had only about £200 million AUM. I had not realised that losses were spread across just the holders of share where there was a shortfall. I thought that they would usually be spread proportionately across all the investors, which would dilute the impact much more.

Beaufort had huge administrators fees, but they spread the fees equally (not proportionately) across all the accounts, and no one lost out. Beaufort had been caught in an FBI sting, and the FCA had twiddled its thumbs for about 18 months before taking action in that case.

That is what the Special Administration Regime requires for pooled nominee accounts, where securities can be differentiated, but units of that security are fungible. Losses related to a specific security will be spread proportionately between all holders of that security, and losses of cash will be spread proportionately between all with cash in the client money account. Investments in a portfolio such as a robo-investment account may be treated differently. It will come down to exactly what you are considered to be the beneficial owner of. Only a small number of SVS investors were contacted with the bad news that they'd have to take a hit on one of the shares they were holding, and none of those posting to MSE sustained a loss that, together with administrator fees, exceeded the FSCS limit. One investor did have a problem that they also had an unpaid FOS compensation award, but this alone exceeded the FSCS limit and so all other losses reduced the amount they could claim in respect of the compensation.

It seems each administration has its difficulties. Beaufort dealt in illiquid securities which made the administration complex, and while fees were capped in the end, the original proposal was far less generous and subject to legal challenge. SVS was stymied by large base of forex traders and foreign investors, which severely restricted choice of broker for onward transfer of investments, and there ended up being only one broker meeting the criteria and willing to accept the new customers - not a great outcome for investors to say the least! Which is why features like fractional share trading give me pause...

The take-home message is that there is safety in numbers, both with choice of broker and choice of investment.