LPA and FSCS

RMurphy195

I'm putting together my LPA and want to ensure that any savings and investment I have remain with organisations that are part of the  Financial Services Compensation Scheme. All good so far but - what if the scheme gets replaced or renamed in future? Should I add "or its equivalent"?

purple_wellies

The FSCS has been around since 2001 and was created by legislation which combined a number of predecessor schemes.  If it were to change materially it would require further legislation.  As the scheme is well established and has retained the same name since then (even though the sectors covered and limits have changed over the years) change doesn’t seem likely.  However if you wanted belt and braces perhaps the solicitor could suggest appropriate wording? Personally speaking I’d suggest “an investment which is covered by a scheme created under a uk regulatory framework and which offers a high degree of protection for investments up to a certain limit.”  

Another thing to consider is that investments should be regularly reviewed to ensure they do not exceed the protection limit (either through growth, or a change in the limit)

Also, the Attorney should regularly confirm that the investment provider remains regulated by the industry regulator for the investment itself.

The reason I say this is that some providers can be regulated by the FCA, but may not have permission to offer certain investments, and those investments will not then be protected by the FSCS. 

In addition, providers can merge, and if you hold investments with both of those providers, once they are under the same regulated entity, only one level of protection is offered rather than two. For example, if company A merges with company B, investors holding assets with both of those companies will have them added together for the purposes of the FSCS, unless the companies continue to trade as separate entities and be regulated as such.

Apologies for the very long response!  I thought about this from the point of view of making sure that a belt embraces approach is taken with regards to investments, if that is what you are wanting to achieve.