What is the legal safeguard on my Quilter "Collective Retirement Account"?

manselton

Hi new here so I cannot post links,

I am 70 and have been retired since 2016. The whole of my pension is in the CRA mentioned above. What happens if Quilter go bust? Or their clearing bank (Euroclear maybe)? The funds I have invested are legally owned by Quilter not me. There is supposed to be strong legal protection of my money through the Financial Conduct Authority. But what exactly does that mean?

I've been reading a book called the The Great Taking by a US private equity fund manager called David Rogers Webb. He manages pension funds. The book is available for free at thegreattaking dot com because he is so concerned with how the law throughout every single country in the world has been altered in the last 10 or 15 years. I do not understand all the words but if he is right then, if something unthinkable happened, I would only get a limited pro-rata amount and do not have a first shout at the pooled funds in the CRA.

These are his key points from Chapter III (And this, he says, applies to every single country in the whole world!)

• Ownership of securities as property has been replaced with a new legal concept of a "security entitlement", which is a contractual claim assuring a very weak position if the account provider becomes insolvent.

• All securities are held in un-segregated pooled form. Securities used as collateral, and those restricted from such use, are held in the same pool.

• All account holders, including those who have prohibited use of their securities as collateral, must, by law, receive only a pro-rata share of residual assets.

• “Re-vindication,” i.e. the taking back of one’s own securities in the event of insolvency, is absolutely prohibited.

• Account providers may legally borrow pooled securities to collateralize proprietary trading and financing.

• "Safe Harbor" assures secured creditors priority claim to pooled securities ahead of account holders.

• The absolute priority claim of secured creditors to pooled client securities has been upheld by the courts. Account providers are legally empowered to “borrow” pooled securities, without restriction. This is called “self help.” As we will see, the objective is to utilize all securities as collateral.

The “self help” applies to “market participants”, meaning definitely not you, the person whose retirement savings are invested in those markets. “Market participants” is a euphemism for the powerful creditors who control governments via debt. They establish their legal certainty with respect to the financial assets while removing yours. Interestingly, besides a small group of the private mafia behind the veneer of the central banks, nobody else is really protected. Not even the multi-millionaires and billionaires if they hold financial securities in the same collateralized structure.

End of quote. Any comments or knowledge please?

xylophone

https://www.quilter.com/siteassets/documents/platform/support/20339_protecting-your-money.pdf

https://committees.parliament.uk/writtenevidence/39093/pdf/

wmb194

manselton said:

Hi new here so I cannot post links,

I am 70 and have been retired since 2016. The whole of my pension is in the CRA mentioned above. What happens if Quilter go bust? Or their clearing bank (Euroclear maybe)? The funds I have invested are legally owned by Quilter not me. There is supposed to be strong legal protection of my money through the Financial Conduct Authority. But what exactly does that mean?

I've been reading a book called the The Great Taking by a US private equity fund manager called David Rogers Webb. He manages pension funds. The book is available for free at thegreattaking dot com because he is so concerned with how the law throughout every single country in the world has been altered in the last 10 or 15 years. I do not understand all the words but if he is right then, if something unthinkable happened, I would only get a limited pro-rata amount and do not have a first shout at the pooled funds in the CRA.

These are his key points from Chapter III (And this, he says, applies to every single country in the whole world!)

• Ownership of securities as property has been replaced with a new legal concept of a "security entitlement", which is a contractual claim assuring a very weak position if the account provider becomes insolvent.

• All securities are held in un-segregated pooled form. Securities used as collateral, and those restricted from such use, are held in the same pool.

• All account holders, including those who have prohibited use of their securities as collateral, must, by law, receive only a pro-rata share of residual assets.

• “Re-vindication,” i.e. the taking back of one’s own securities in the event of insolvency, is absolutely prohibited.

• Account providers may legally borrow pooled securities to collateralize proprietary trading and financing.

• "Safe Harbor" assures secured creditors priority claim to pooled securities ahead of account holders.

• The absolute priority claim of secured creditors to pooled client securities has been upheld by the courts. Account providers are legally empowered to “borrow” pooled securities, without restriction. This is called “self help.” As we will see, the objective is to utilize all securities as collateral.

The “self help” applies to “market participants”, meaning definitely not you, the person whose retirement savings are invested in those markets. “Market participants” is a euphemism for the powerful creditors who control governments via debt. They establish their legal certainty with respect to the financial assets while removing yours. Interestingly, besides a small group of the private mafia behind the veneer of the central banks, nobody else is really protected. Not even the multi-millionaires and billionaires if they hold financial securities in the same collateralized structure.

End of quote. Any comments or knowledge please?

You should take care not to read conspiracy rubbish like that.

Linton

I cant comment on the situation in the US.  In the UK, assuming you are investing in mainstream investments  through regulated  companies, your money is ring-fenced from that of the intermediaries.  They cannot use your money to pay their debts.  

The topic comes up repeatedly on this forum.  No-one has yet come up with a realistic scenario where your money could be permanently lost. You as a customer are a valuable asset so it is likely that the failed company's business would be taken over by another company. The worst that could reasonably happen if an intermediary goes bust is that you could lose access to your money while things are being sorted out. 

This is quite different to money in a bank account. When you put money in a bank account that money becomes the bank's.  All you have is a promise from the bank to pay it back.  Should the bank be unable to pay it back it would be your loss if there were no guarantee scheme.

wmb194

Linton said:

I cant comment on the situation in the US.  In the UK, assuming you are investing in mainstream investments  through regulated  companies, your money is ring-fenced from that of the intermediaries.  They cannot use your money to pay their debts.  

The topic comes up repeatedly on this forum.  No-one has yet come up with a realistic scenario where your money could be permanently lost. You as a customer are a valuable asset so it is likely that the failed company's business would be taken over by another company. The worst that could reasonably happen if an intermediary goes bust is that you could lose access to your money while things are being sorted out. 

This is quite different to money in a bank account. When you put money in a bank account that money becomes the bank's.  All you have is a promise from the bank to pay it back.  Should the bank be unable to pay it back it would be your loss if there were no guarantee scheme.

The principles in the US are the same as here.

tacpot12

I agree the risk of long-term loss is nil due to the legal safeguards in place, there is a risk of income from assets being inaccessible for short periods - I worked on a migration project where retail investment portfolios were being migrated to a new platform, and there was a problem with one form of withdrawal that hadn't been tested during the project. I'd been arguing that we should be testing this for at least two months, but it didn't get tested, and it didn't work when we went live. It took the software vendor two weeks to resolve the issue (despite it being the highest priority issue they were working on) and during the time we had one customer who was dependent on the income who was calling every day to get an update on when they would get paid!

So, I would recommend keeping at least a month of income in a seperate bank account. I would use a second current account if you have to protect against problems with your main account. 

manselton

Many thanks to all who have replied. I agree with the comment about conspiracy theories but this book is referenced back to legislation, which to me makes it matter of evidence. I'm aware that Quilter have funds totaling ~£100 billion so something bad happening seems a very distant possibility. I'll download the links and read the documents above. Thanks again.

manselton

xylophone I've had a quick skim through the two links you provided. The first looks very re-assuring and gives me a better understanding of how my assets are protected. The only point that stuck out (because I don't really know how to interpret it) was on page 2:

"Assets under management £69 billion (as at 31 March 2023)"

Comparing this to a statement under their submission to the government for greater online protection for financial institutions ( i.e the second link) which says,

"Quilter oversees £126.6 billion in customer investments (as at 30 June 2021)".

I cannot see me doing anything quickly as I took a deal of time getting an IFA (He's chartered) and investment I could trust. But my understanding will grow.

LHW99

Is the £69bn what they directly manage & the £126.6bn includes money that they manage on behalf of other companies? (Don't know, just a thought)

Albermarle

LHW99 said:

Is the £69bn what they directly manage & the £126.6bn includes money that they manage on behalf of other companies? (Don't know, just a thought)

Or some kind of sale of part of the business. It could be anything.

dunstonh

. I'm aware that Quilter have funds totaling ~£100 billion so something bad happening seems a very distant possibility.

Its important to differentiate between the platform and the fund house.  And you have the offshore arm as well.