More than 85k in S&S ISA

masonic

patch9495 said:

Thanks all 

When I say 85k I mean 85k portfolio value not cash

If the concern is around the platform failing, then the £85k is in relation to administrator fees and stolen assets and/or cash. It is unlikely fees and missing assets would total more than £85k per Fidelity client, and unless you are in very unusual investments there is very little risk in exceeding this amount on the platform.

jamesd

Insolvency of a platform can take many years to be sorted out, with the fees paid from client money when the platform's own money is gone. Don't expect cash in your bank account in a week or overnight as you might for a bank failure. Expect no access and no money withdrawing for years unless you can demonstrate hardship.

Diversification of platforms protects access to your money, not just the money.

ColdIron

patch9495 said:

I have >£220k in a Fidelity S&S ISA. From initial deposits aiming to keep below the then FSCS limit of £50k! The fact that it's in underlying investments is reassuring to me.

Would there be a risk here that if Fidelity got into trouble you'd lose the 135k?

Or is this mitigated by the fact Fidelity ring fence client funds, so they can be returned in the event of financial difficulty?

Fidelity do not own the funds so could not use them to settle any of their obligations, unlike cash deposits with banks or building societies. Fidelity would use multiple custodians for the safekeeping and administration of your assets where you are the beneficial owner

In the event of financial difficulty it is unlikely that your funds would be returned to you, someone would buy their client book without recourse to the FSCS

FSCS at the platform level protects you from fraud, I.e. in the extraordinary event that Fidelity had been trousering your cash instead of acting on your purchasing instructions. However the scale of collusion required to pull this off is difficult to imagine

masonic

ColdIron said:

FSCS at the platform level protects you from fraud, I.e. in the extraordinary event that Fidelity had been trousering your cash instead of acting on your purchasing instructions. However the scale of collusion required to pull this off is difficult to imagine

Indeed, Fidelity's UK subsidiary must be getting close to £50bn assets under management, so someone would need to have trousered something like a 9 figure sum without anyone noticing for it to put a typical investor with <£1m on the platform at risk of an uncompensated loss.

mebu60

patch9495 said:

I have >£220k in a Fidelity S&S ISA. From initial deposits aiming to keep below the then FSCS limit of £50k! The fact that it's in underlying investments is reassuring to me.

Would there be a risk here that if Fidelity got into trouble you'd lose the 135k?

Or is this mitigated by the fact Fidelity ring fence client funds, so they can be returned in the event of financial difficulty?

In the unlikely event of Fidelity hitting trouble the most likely outcome would be my holdings being transferred to another company. This I suspect would take some time, many (many) months probably during which time I would have no access to my investment holdings. The FSCS would pay the (extortionate) fees of advisers etc up to £85k per customer. 

masonic

mebu60 said:

patch9495 said:

I have >£220k in a Fidelity S&S ISA. From initial deposits aiming to keep below the then FSCS limit of £50k! The fact that it's in underlying investments is reassuring to me.

Would there be a risk here that if Fidelity got into trouble you'd lose the 135k?

Or is this mitigated by the fact Fidelity ring fence client funds, so they can be returned in the event of financial difficulty?

In the unlikely event of Fidelity hitting trouble the most likely outcome would be my holdings being transferred to another company. This I suspect would take some time, many (many) months probably during which time I would have no access to my investment holdings. The FSCS would pay the (extortionate) fees of advisers etc up to £85k per customer. 

To put this into context, the SVS Securities failure had assets bulk transferred about 11 months after they failed. This was a fairly complex case where systems and practices were clearly sub-standard, they had a large forex trading business on the side that made choice of brokers willing to take on the business quite limited, and there was client money and assets missing. Fees ended up being capped at a fraction of the FSCS limit, up to about £15k per customer IIRC. For a well managed major provider with lots of checks and balances in place, the process would likely be much cleaner, cheaper and I'd be surprised if it took this long, although best to prepare for the worst.

patch9495

Okay thanks for all of the replies however I may be getting confused here.

My general understanding was to never keep more than 85k in a single institution as I wouldn't be protected in the event if Financial difficulties by the institution above this amount.

In my case I hold vanguard funds purchased and held within the Fidelity platform, 

So if either Vanguard or Fidelity were to get into financial trouble (not poor fund performance) would my holdings above 85k be safe?

dunstonh

patch9495 said:

I have >£220k in a Fidelity S&S ISA. From initial deposits aiming to keep below the then FSCS limit of £50k! The fact that it's in underlying investments is reassuring to me.

Would there be a risk here that if Fidelity got into trouble you'd lose the 135k?

Or is this mitigated by the fact Fidelity ring fence client funds, so they can be returned in the event of financial difficulty?

Fidelity has a very low level of illiquid assets on their platform.  So, it would be a desirable asset for another buyer and easy to wind down.     As mentioned higher up, the problem is when platforms have a higher level of illiquid assets. 

Also, do not mix up the platform with the fund house.   Two two things are separate,even when within the same group.  

My general understanding was to never keep more than 85k in a single institution as I wouldn't be protected in the event if Financial difficulties by the institution above this amount.

When its a bank, yes.  When its an investment platform or fund house, no. 

So if either Vanguard or Fidelity were to get into financial trouble (not poor fund performance) would my holdings above 85k be safe?

Vanguard does not invest in illiquid assets.   So, no worry there.
Fidelity platform has a low level of illiquid assets.  So, no worry there.
Both companies are profitable.  

Remember that deposits FSCS protection is different to investments or life & pensions.

ColdIron

patch9495 said:

So if either Vanguard or Fidelity were to get into financial trouble (not poor fund performance) would my holdings above 85k be safe?

You asked that in your OP, did you read the replies you received? It's difficult to know what to add to them

GeoffTF

dunstonh said:

Each OEIC/UT has £85k per fund house

That is true only if the funds are UK domiciled. A majority of  the Vanguard OEICs marketed in the UK are domiciled in the Republic of Ireland, but that is not something to worry about.