How safe is my pension?

Triumph13

https://forums.moneysavingexpert.com/discussion/comment/82137545#Comment_82137545

FCA regulated firms are required to have a CASS audit from an independent external auditor. It can't be done in-house. In turn, the FCA have processes to monitor the standards of those audits.

I'm not saying it's foolproof, and some small players will have it done by tiny firms you've never heard of. The big boys though, will mostly be using the big names eg Interactive Investor are currently with KPMG, but will move shortly to EY. On that basis, I'm pretty comfortable having a seven figure SIPP with them. I would not be comfortable doing so if they were audited by a one-man-and-a-dog outfit, and would then either avoid them or spread my risk. The big providers know that, and are therefore prepared to pay the higher fees of the big audit firms. They in turn pay very big insurance premiums, because their necks will be on the block if a provider did prove fraudulent in the way you fear.

michael1234

https://forums.moneysavingexpert.com/discussion/comment/82137838#Comment_82137838

Thanks again for your high quality and on topic answer.

Presumably these CASS requirements also apply to the p2p sector because they also hold client money. If a CASS audit is needed monthly (or more often), why didn't it stop a director of Funding Secure dipping his hand into the client account on a regular basis?

FundingSecure could have been a stocks&shares platform. It was p2p so some folk are happy to say its a problem only of p2p. I would certainly agree that there are many other risks associated with p2p, but the client account and missrepresentation fraud are common to both.

Triumph13

P2P is very much not my area of expertise. A quick Google though, reveals that, as their role is technically just matching investors to borrowers, they only hold client money at certain stages of the lending cycle - money received from investors and not yet passed on to borrowers and repayments / interest not yet refunded to investors. The loans themselves are not client money. Many smaller P2P firms therefore had much less strict FCA regulation than a bank or investment platform whose whole business is looking after client money.

michael1234

P2P is very much not my area of expertise. A quick Google though, reveals that, as their role is technically just matching investors to borrowers, they only hold client money at certain stages of the lending cycle - money received from investors and not yet passed on to borrowers and repayments / interest not yet refunded to investors. The loans themselves are not client money. Many smaller P2P firms therefore had much less strict FCA regulation than a bank or investment platform whose whole business is looking after client money.

Which is just like traditional stocks&shares platforms who typically hold client cash prior to stocks/funds being purchased and after their sale.

On a stocks&shares platform you first transfer money into the platform and then buy your favourite stock/fund/whatever. On a p2p platform you also transfer money in and then buy p2p stuff. Prior to purchase, in both cases the money is held as "cash" and both platforms are authorised and regulated by the FCA. In both cases, the platform claims the funds are held in a bank account somewhere. So I don't see the difference when it comes to holding this client cash?

Triumph13

The difference is that the platform then holds the investments on your behalf and these count as client money and are heavily regulated / audited.

With P2P once the money is out the door that's it. The only regulation is checking there is a backup plan for someone else to take over the administration that the P2P firm is doing on your behalf, should your P2P firm go bust.

If you want protection then use a bank. There your money is treated as client money and it's the bank that lends money to borrowers, not you.

dunstonh

Presumably these CASS requirements also apply to the p2p sector because they also hold client money. 

P2P today is different to how it used to be. From what I can surmise, you were using P2P around the time it was either unregulated or in its very early light stages.

Just because a firm is FCA-regulated doesn't mean that all the activities they carry out are regulated or that where they are regulated, they are not in the same way as other areas. As mentioned already, P2P was the Wild West for many years and some stages firms were FCA-regulated but had none of the requirements that you would expect of mainstream investments.

P2P became regulated by the FCA in April 2014. Platforms were regulated, subject to FCA Principles, relevant SYSC requirements, client-money rules where applicable, financial-promotion requirements and reporting. However, lenders did not initially receive the later retail-investor gateway protections.

The period from 2014 to 2019 was materially lighter in regulation. Post December 2019, it was strengthened and much more recognisably regulated closer to how you would expect mainstream investment firms to be regulated.

FundingSecure failed before the 2019 changes.

Ultimately, P2P is a high-risk lending investment, not a mainstream investment product, and the P2P loans themselves have no FSCS protection.

History has shown that when people go off the beaten track into niche areas of investment, it often turns out badly. Sticking to the mainstream where the products are built to higher standards and have more safeguards in place is a safer bet for the vast majority of people.

michael1234

The difference is that the platform then holds the investments on your behalf and these count as client money and are heavily regulated / audited.

By "platform" you mean stocks&shares platform? Money invested there is I thought considered client assets not client money.

With P2P once the money is out the door that's it.

Yes but I'm talking about money that isn't "out the door". Money that isn't invested or waiting to be invested on any platform including p2p is the client account. As you say, in p2p once its invested then all bets are off but I'm talking about whilst its held in cash on the platform.

I suspect we're at the end of the road with this. I think you were closest in providing some reassurance regarding CASS (but less so on who conducts the audits) so thank you for that. I remain to be convinced that it would be all but impossible for at least some of the frauds perpetrated in p2p to be repeated on a regular stocks&shares including sipps platforms.

dunstonh

By "platform" you mean stocks&shares platform? Money invested there is I thought considered client assets not client money.

Your platform administers and safeguards the investment, but it is not part of the platform’s own assets. In an ISA, you are the beneficial owner of the investments, although they are usually registered in a nominee’s name. In a SIPP, the pension scheme trustee generally holds the investments for the scheme, with your pension entitlement linked to the assets allocated to your arrangement. In both cases, the assets should be segregated from the platform’s own money and are not ordinarily available to its creditors if it fails.

Sam_666

https://forums.moneysavingexpert.com/discussion/comment/82137838#Comment_82137838

That is very high wishful thinking, not based on facts.

. Wyelands Bank — 2022: The UK bank’s banking licence was cancelled after serious concerns about its financial position and lending practices. In March 2025, the UK audit regulator sanctioned PwC over its audit of Wyelands Bank.

• London Capital & Finance — 2019: LCF collapsed after selling high-interest mini-bonds to thousands of investors. In 2024, PwC was fined £15 million for failing to alert the regulator to suspected fraudulent activity. However, LCF was an investment firm, not a bank, and the issue involved regulatory reporting rather than simply failing to predict a bank collapse.

• Carillion — 2018: This was a major UK corporate collapse rather than a financial institution. Its auditor, KPMG, was sanctioned after the company collapsed with billions of pounds of liabilities. The final regulatory settlement was published in 2024.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82140454#Comment_82140454

These are all good examples of not sticking to the mainstream. In a couple of those examples, It simply highlights what was said earlier in the thread: FCA regulation doesn’t mean they’re regulated in every area they transact in. For example, LC&F didn't offer a regulated product.