FSCS query

Marske77

Hi, I’m new to this forum and hoping for some advice with a query. 

I have had a monthly savings plan with Fidelity for a number of years. The value of all investments now exceeds £85k of which about two thirds are Fidelity’s own funds and a third managed by other companies with Fidelity the distributor. 

I’ve always been keen to avoid exceeding the FSCS limit with institutions. I want to carry on with a monthly investment and ideally would prefer to keep with the same company rather than start a new account elsewhere. So was hoping for advice as Fidelity’s web page isn’t that clear. 

My sense is that the separation of client and business funds makes the risk lower than with a bank / building society.

Would be grateful for views in case I’ve got this wrong / over-simplified. 

Thanks. 

masonic

It's a common question and you are correct in that the chances of losing 100% of your ring-fenced investments should Fidelity fail (itself vanishingly unlikely) is next to nothing. Perhaps if you had assets of £1m with them, there is a chance of having a shortfall in excess of £85k.

Providing you pick one of the major players with a lot of assets under management, and you invest in mainstream popular funds, this is a completely different scenario to a bank going bust.

mebu60

If Fidelity hit the buffers the investments would still exist and be administered (after some delay) by another provider. The FSCS protection should cover the costs involved in the process. I have considerably more than £85k in an S&S ISA with them. 

Cash savings in a bank / building society is more pertinent to keep within the limit per institution. 

phlebas192

Marske77 said:

My sense is that the separation of client and business funds makes the risk lower than with a bank / building society.

That's pretty much the case. Whilst I wouldn't put more than £85k of cash in a single bank or building society I'm very comfortable with a lot more in an investment platform - at least as long as it's one of the major players, of which Fidelity is certainly one. The main risk with investments is them performing badly (ie nothing to do with the platform) and then either fraud or plain incompetence which is highly unlikely with a major player.

FWIW, between us my wife & I have (individually)  £900k, £325k & £225k in AJ Bell, Interactive Investors and Hargreaves Lansdown investment products respectively. I lose no sleep over this.

The most significant risk is that access to the funds within an account might be impossible for a while (eg if they were hit by a cyber attack). So if you are dependant upon the income then it would be worth using a second provider to mitigate the risk.Otherwise, I really would not worry.

Marske77

Thanks to all. You’ve confirmed what I thought - but it was worth checking. Understandably, I suppose, Fidelity has to keep its website factual / neutral, so your comments are helpful. 

dunstonh

Marske77 said:

Thanks to all. You’ve confirmed what I thought - but it was worth checking. Understandably, I suppose, Fidelity has to keep its website factual / neutral, so your comments are helpful. 

It does have a regulatory requirement to do so.  What bit do you believe is wrong?

DullGreyGuy

The FSCS is an interesting concept, the laws are fairly simplistic but very little has been tested in court. 

Ive asked questions of the FSCS as a provider of financial services so that I can correctly advise my customers and in some matters they've given a very clear answer and the same person has told me they dont know for other scenarios. Its not just the manager I am talking about as for a few matters on their website they openly admitted they arent clear.

Marske77

dunstonh said:

Marske77 said:

Thanks to all. You’ve confirmed what I thought - but it was worth checking. Understandably, I suppose, Fidelity has to keep its website factual / neutral, so your comments are helpful. 

It does have a regulatory requirement to do so.  What bit do you believe is wrong?

Sorry - i missed this comment. I don’t think any text is wrong just that it was helpful to take the opinions of others to make sure I had interpreted correctly.