Trading website ig.com - how safe leaving the stocks for long term?

maxsteam

GeoffTF said:

maxsteam said:

Further to the above, the FSCS only applies to cash balances.

No, that is not true:

https://www.investorschronicle.co.uk/managing-your-money/2019/11/07/what-to-do-when-your-broker-goes-bust/

Ok, the FSCS offers cash compensation when a suitably registered firm fails. There are other rules and schemes to protect investments. If you have invested £1m in shares with a broker who is a member of the London Stock Exchange (or most other major stock exchanges) and the broker goes bust, there's no £85k limit, you get your £1m of shares. If you had money or investments with Premier FX, a firm registered with the FCA which claimed that customers were protected by the FSCS, you are likely to have lost everything when the firm went bust (they were licenced by the FCA to hold clients' money for up to 3 days, they held money for more than 3 days so customer protection didn't apply). If you have £1m invested with a used car broker, you are unlikely to have any FCA or FSCS protection.

Unfortunately, when it comes to the crunch, you don't get FSCS protection just because you expected it.

IG are a big business that has been around for a while but I am unsure whether they are a member of a recognised stock exchange.

GeoffTF

maxsteam said:

GeoffTF said:

maxsteam said:

Further to the above, the FSCS only applies to cash balances.

No, that is not true:

https://www.investorschronicle.co.uk/managing-your-money/2019/11/07/what-to-do-when-your-broker-goes-bust/

Ok, the FSCS offers cash compensation when a suitably registered firm fails. There are other rules and schemes to protect investments. If you have invested £1m in shares with a broker who is a member of the London Stock Exchange (or most other major stock exchanges) and the broker goes bust, there's no £85k limit, you get your £1m of shares. If you had money or investments with Premier FX, a firm registered with the FCA which claimed that customers were protected by the FSCS, you are likely to have lost everything when the firm went bust (they were licenced by the FCA to hold clients' money for up to 3 days, they held money for more than 3 days so customer protection didn't apply). If you have £1m invested with a used car broker, you are unlikely to have any FCA or FSCS protection.

Unfortunately, when it comes to the crunch, you don't get FSCS protection just because you expected it.

IG are a big business that has been around for a while but I am unsure whether they are a member of a recognised stock exchange.

There used to be a stock exchange compensation scheme that offered unlimited compensation. That scheme was replaced by the FSCS, which offers only limited compensation.

wmb194

maxsteam said:

GeoffTF said:

maxsteam said:

Further to the above, the FSCS only applies to cash balances.

No, that is not true:

https://www.investorschronicle.co.uk/managing-your-money/2019/11/07/what-to-do-when-your-broker-goes-bust/

Ok, the FSCS offers cash compensation when a suitably registered firm fails. There are other rules and schemes to protect investments. If you have invested £1m in shares with a broker who is a member of the London Stock Exchange (or most other major stock exchanges) and the broker goes bust, there's no £85k limit, you get your £1m of shares. If you had money or investments with Premier FX, a firm registered with the FCA which claimed that customers were protected by the FSCS, you are likely to have lost everything when the firm went bust (they were licenced by the FCA to hold clients' money for up to 3 days, they held money for more than 3 days so customer protection didn't apply). If you have £1m invested with a used car broker, you are unlikely to have any FCA or FSCS protection.

Unfortunately, when it comes to the crunch, you don't get FSCS protection just because you expected it.

IG are a big business that has been around for a while but I am unsure whether they are a member of a recognised stock exchange.

The problem though is maladministration. What if the broker in its nominee account only actually owns shares amounting to £0.95m even though it claimed it held £1m worth on your behalf? This is effectively what the FSCS covers when it comes to investments.

maxsteam

GeoffTF said:

There used to be a stock exchange compensation scheme that offered unlimited compensation. That scheme was replaced by the FSCS, which offers only limited compensation.

Yes, indeed, but only for brokers that were members of the stock exchange. As stated, £1m invested with a used car broker isn't covered by any compensation scheme.

A broker who is a member of a major stock exchange is required to hold clients' shares in nominee accounts that cannot be used to pay creditors if the firm goes bust 

GeoffTF

maxsteam said:

GeoffTF said:

There used to be a stock exchange compensation scheme that offered unlimited compensation. That scheme was replaced by the FSCS, which offers only limited compensation.

Yes, indeed, but only for brokers that were members of the stock exchange. As stated, £1m invested with a used car broker isn't covered by any compensation scheme.

A broker who is a member of a major stock exchange is required to hold clients' shares in nominee accounts that cannot be used to pay creditors if the firm goes bust 

I thought that all stockbrokers were members of the stock exchange back in those days. IIRC the FSCS came in at about the time that the stock exchange minimum commissions were abolished. London Stock Exchange membership still exists:

https://www.londonstockexchange.com/trade/membership

Alexland

maxsteam said:

A broker who is a member of a major stock exchange is required to hold clients' shares in nominee accounts that cannot be used to pay creditors if the firm goes bust 

Client money/asset rules goes beyond members of a stock exchange however in the event of fraud/theft the client account may not reconcile to the assets in which case you fall back on FSCS protection if available.

GeoffTF

Alexland said:

maxsteam said:

A broker who is a member of a major stock exchange is required to hold clients' shares in nominee accounts that cannot be used to pay creditors if the firm goes bust 

Client money/asset rules goes beyond members of a stock exchange however in the event of fraud/theft the client account may not reconcile to the assets in which case you fall back on FSCS protection if available.

If a broker goes bust, the administrators can take their fees from "ring fenced" client assets. It is then necessary to fall back on FSCS protection, even if all the client assets are present and correct. Brokers do not have to hold client shares in nominee accounts, except for ISAs. Personal Crest accounts are still available.

numbersrule

everfor007 said:

I am having share dealing account in ig.com and invested my saving  into few uk and us stocks i.e microsoft, apple etc and i want to leave it for long term for next 5 to 10 years.
As everything is online and no paper trail. How safe it's leaving the stocks for long term in share dealing website? what happens to my stocks if share dealing website  company gone burst ? Does my stocks ledger will be automatically registered to any govt financial body for retrievable?  

The risk of IG ( long established ) going bust is far far lower risk than that which you face when holding a retail investor account with IG.
Their risk warning says that 66% of retail investor accounts lose money when trading CFDs and spread bets.
If you believe you can outsmart the statistics then you may think your own personal risk is much lower than a typical retail investor.  However, based on the way you have asked the question, my guess is you are highly likely to succumb to the normal high risk.
My advice is get out quick before you lose the majority of your bet stake.
Find a safer place for your cash.  There is plenty of good advice in these forums.

GeoffTF

numbersrule said:

everfor007 said:

I am having share dealing account in ig.com and invested my saving  into few uk and us stocks i.e microsoft, apple etc and i want to leave it for long term for next 5 to 10 years.
As everything is online and no paper trail. How safe it's leaving the stocks for long term in share dealing website? what happens to my stocks if share dealing website  company gone burst ? Does my stocks ledger will be automatically registered to any govt financial body for retrievable?  

The risk of IG ( long established ) going bust is far far lower risk than that which you face when holding a retail investor account with IG.
Their risk warning says that 66% of retail investor accounts lose money when trading CFDs and spread bets.

They provide ordinary stockbroking accounts too.