Trading 212 - Safe for over £85000 cash ISA?

Izzywhizzyletsgetbizzy

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

Statement below says 'each' partner bank has the £85 k protection ..??

PRAISETHESUN

Izzywhizzyletsgetbizzy said:

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

Statement below says 'each' partner bank has the £85 k protection ..??

As I mentioned in a previous post, T212 divides your money up between their partner banks. Individually each bank has £85k deposit protection. If T212 divides your money up in such a way that no one bank has more than the limit then it is safe, in theory allowing more than £85k to be held with T212 without issue

The only caveat is that as far as I can see T212 don't guarantee they will divide up your money in such a way to ensure that each individual partner bank holds less than the limit.

Arthurian

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

I agree. No matter how they 'ring-fence' customers' pots of money internally, the relationship of the customer is with Trading212, not the banks. IMHO.

eskbanker

Arthurian said:

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

I agree. No matter how they 'ring-fence' customers' pots of money internally, the relationship of the customer is with Trading212, not the banks. IMHO.

So you're accusing Trading 212 of lying, when they expressly contradict that opinion?

Izzywhizzyletsgetbizzy

PRAISETHESUN said:

Izzywhizzyletsgetbizzy said:

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

Statement below says 'each' partner bank has the £85 k protection ..??

As I mentioned in a previous post, T212 divides your money up between their partner banks. Individually each bank has £85k deposit protection. If T212 divides your money up in such a way that no one bank has more than the limit then it is safe, in theory allowing more than £85k to be held with T212 without issue

The only caveat is that as far as I can see T212 don't guarantee they will divide up your money in such a way to ensure that each individual partner bank holds less than the limit.

Thanks..there is somewhere on the app where you can see the 3 partners and the amount held with each.

masonic

Arthurian said:

dave1247 said:

I think it is unlikely that there is FSCS protection for a cash isa with Trading 212, as that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings.

I agree. No matter how they 'ring-fence' customers' pots of money internally, the relationship of the customer is with Trading212, not the banks. IMHO.

What exactly do you agree with? If you argee that "is unlikely that there is FSCS protection for a cash isa with Trading 212", then you are agreeing with something that is verifiably false. Anyone who can be bothered can go to the FCA register and check Trading212's entry, will see it has the Client Money regulatory permission and the FCA itself confirms that FSCS protection may apply depending on the regulated activity, where holding and controlling client money is one of the activities where it does apply.

If you are agreeing that "that protection is for individuals investing directly in a firm authorised with FCA to provide bank accounts or to take savings", then this is not an untrue* statement, but it is an incomplete statement, because FSCS protection applies to "a regulated activity carried on (whether or not with permission) by relevant persons", which include activities such as financial advice, holding and controlling client money, deposit accounts, mortgages, certain investments, insurance, pensions, and funeral plans.

It is absolutely the case that if Trading212 were to fail, customers using its ISA products would be entitled to claim up to £85k from the FSCS that is needed to satisfy a repayment claim made against it in relation to money it was holding or controlling on your behalf. It does not even matter if it should have been doing this, the fact that it is authorised by the FCA and was acting in this capacity is enough.

If Trading212 were to fail, then clearly the limit is £85k and there would be no more than £85k available to be paid out, even if the loss was greater than this. But for the loss to be greater, a very significant portion of the money that was supposed to be spread among the banks providing the client money accounts would have to have disappeared. Any shortfall would be spread among each client, and each client could claim up to £85k in respect of their personal share of the total loss. So the risk is very low indeed, but not zero.

There is certainly no suggestion that, with Trading212 out of the way, you would have no claim upon the funds held by Barclays and the other banks because you didn't have a direct customer relationship with them. That would be preposterous!

If, however, Barclays went bust, then that would only affect money held within the Barclays nominee account. With Trading212 still in business, it could use the records it is required to keep under CASS rules to identify the beneficial owner of all of the money held with Barclays to support claims under the FSCS. In fact, it is unlikely clients would need to do anything as FSCS is quite capable of working with firms directly to deal with such claims. Any monies held in the nominee accounts provided by the two other banks would be unaffected, so there would be no need to consider sums held within these.

But what if all three banks go bust? In that scenario, the claims should be dealt with independently and separately, but this is rather academic, because if all three banks go bust, then the entire banking system is likely to have failed and your money will be worthless anyway. You'd probably make better use of your time coming up with a survival plan, joining in with the looting, or fleeing to safety in a far away land.

* (if you substitute "with" for "in", since investing in Barclays or any other company is an example of something that would not get you FSCS protection if said company failed and became worthless)

sausage_time

Personally, I would cap any cash in a T212 cash ISA at £85k.