Holding cash interactive investor / FSCS protection

RoadToRiches

Can anyone tell me if holding more than £85K in cash in interactive investor pension account if it's covered if they went bust. As far as I can tell it's only protected up to the FSCS limits but then they say client money is in a separate account and protected in full even over the 85K limit. Need to ensure that cash is protected in the event they go under.

Notepad_Phil

Where did you read that particular bit of information?

I'd say the most pertinent piece of information comes from  https://www.ii.co.uk/about-us/your-protection where it says

"In the event of Interactive Investor Services Limited being declared in default, and in the unlikely event of there being a shortfall between the assets held and your account balance, eligible customers would also be protected by the FSCS up to the same £85,000 per claimant."

So under the absolute worst of situations where fraud has run riot and money hadn't been saved within the banks it should have been, then you'd only be covered for £85k in its entirety for everything you held via ii.

A more realistic worst case is that one of the banks that ii uses goes under, in that case you'd get FSCS protection for £85k for the money you hold in entirety with that bank (i.e. both inside and outside of ii, not £85k for inside and a separate £85k for money you hold outside in that bank)..

So in summary, no I don't believe you get unlimited cover for money you hold within ii.

Albermarle

Not sure about ii but similar providers hold cash in the customer accounts, with more than one bank.
You need to delve into the website to see if you can find out exactly where they hold cash. If you had a large amount of cash with II and for example, they mainly used NatWest as their bank, and you had substantial savings with Nat West separately you may wish to change things around.

This is the info from another provider.

Are there limits to the amount of FSCS compensation?

Yes. The maximum amount of compensation payable to an individual under the FSCS will depend on the type of financial product that you hold and who the claim is against.

• If a fund provider is in default, the limit is £85,000 per provider for UK domiciled mutual funds (OEICS and Unit Trusts).
• If a distributor/platform is in default there is a limit of £85,000.
• If one of the banks used to hold client money is in default then the limit is £85,000.

How and where we hold cash

We spread any cash you hold across several banks for your security. The banks we work with include:
 

• Barclays Bank Plc
• HSBC Bank Plc
• Royal Bank of Scotland Plc
• Lloyds Bank Plc
• Bank of America N.A.

michaels

So how would one be certain that the x00k invested through II is actually held in the assets that it is supposedly invested in and that these could not be sold by II and the money withdrawn into the director's personal accounts if they were about to hit the buffers?

Albermarle

michaels said:

So how would one be certain that the x00k invested through II is actually held in the assets that it is supposedly invested in and that these could not be sold by II and the money withdrawn into the director's personal accounts if they were about to hit the buffers?

I guess you can not be certain, and that is what the £85K compensation for the platform is for . I think what you suggest though is unlikely to happen in a large company like this. Would be quite a feat to get away with it !

coyrls

II is now owned by abrdn plc and so that would be a significant failure.  If II alone "hit the buffers", I doubt that it would be enough to take abrdn down.

coyrls

I would also expect that abrdn's due diligence established that the II's assets under administration had not been siphoned off to II's directors.

RoadToRiches

I get II are part of abrdn now but I also remember the likes of Northern Rock and Bradford and Bingley. History tends to repeat after all is said and done and so just wanted to know how safe cash holding would be on this platform and if it was limited to just the 85K. 

AlanP_2

But ii is not a retail savings / mortgage business as they were it is an investment platform.

They do not use your money in their business, a bank or building society does. In fact, for them, that is their entire business.

Borrow from you (your savings account) at 2% and lend the money to me (my mortgage) at 3% or whatever.

As said the cash of yours that ii have with a bank somewhere is possibly at risk but ii going bust won't affect that one way or another.

Obvious question, why have you got a large cash sum earning little or zero interest in am investment account? Are you waiting to re-enter markets or something?

RoadToRiches

AlanP_2 said:

Obvious question, why have you got a large cash sum earning little or zero interest in am investment account? Are you waiting to re-enter markets or something?

Yes, I am expecting a correction, and have it earmarked for some value investing.