FSCS platform / fund manager £85k guarantee
Discussion
Dear all,
I ve been a long term follower of this wonderful forum and decided to sign up!
A question about the £85k FSCS protection, which I see lots of different answers to online that seems to slightly differ.
If I have for example £100k invested with legal and general funds via AJ bell, what is the FSCS actually covering:
Are we covered if AJ Bell goes bust - my understanding is the money isn t owned by AJ bell anyway so there is no money to lose as such - but it s important to clarify as it theoretically means every time you have more than £85k with a platform you might then need funds in a different platform.
And/or
Are we covered if legal and general goes bust - again my understanding is the money is ring fenced and is tied to the shares in the fund rather than the fund itself? This also matters as it theoretically means if not protected we should never have more than £85k with one fund manager.
And/or
My assumption is when the company we hold shares in itself goes bust, the money is gone - and it s not covered by FSCS. This seems reasonable given the risk of investing in a company.
Any firm views on the above welcomed, and I d be interested if anyone splits fund managers and platforms based on the above.
I m not sat here sweating that AJ Bell or legal and general are about to go bust, but that doesn t mean I shouldn t consider safeguarding investments.
Many thanks,
I ve been a long term follower of this wonderful forum and decided to sign up!
A question about the £85k FSCS protection, which I see lots of different answers to online that seems to slightly differ.
If I have for example £100k invested with legal and general funds via AJ bell, what is the FSCS actually covering:
Are we covered if AJ Bell goes bust - my understanding is the money isn t owned by AJ bell anyway so there is no money to lose as such - but it s important to clarify as it theoretically means every time you have more than £85k with a platform you might then need funds in a different platform.
And/or
Are we covered if legal and general goes bust - again my understanding is the money is ring fenced and is tied to the shares in the fund rather than the fund itself? This also matters as it theoretically means if not protected we should never have more than £85k with one fund manager.
And/or
My assumption is when the company we hold shares in itself goes bust, the money is gone - and it s not covered by FSCS. This seems reasonable given the risk of investing in a company.
Any firm views on the above welcomed, and I d be interested if anyone splits fund managers and platforms based on the above.
I m not sat here sweating that AJ Bell or legal and general are about to go bust, but that doesn t mean I shouldn t consider safeguarding investments.
Many thanks,
Client money is segregated, so no limit there.
If your investment falls to nil, that's on you.
If the provider goes bust the FSCS covers up to £85,000 per investor to cover wind up costs. It's extremely unlikely you'd breach this, unless you were using a tiny two bit operation.
The FSCS is also relevant for any cash you might be holding on a platform. The better ones will use multiple banks to hold your cash, so it's not just £85,000 once.
If your investment falls to nil, that's on you.
If the provider goes bust the FSCS covers up to £85,000 per investor to cover wind up costs. It's extremely unlikely you'd breach this, unless you were using a tiny two bit operation.
The FSCS is also relevant for any cash you might be holding on a platform. The better ones will use multiple banks to hold your cash, so it's not just £85,000 once.
If the platform/fund manager fails cleanly and client assets have been properly segregated then FSCS is ~irrelevant as your investment/fund assets should just be transferred to another platform/fund manager, although you'd still probably be waiting a while for everything to get sorted out.
If client assets haven't been properly segregated (either through negligence or malfeasance), then FSCS kicks in and underwrites the cost of going after them - so ideally they can be found and returned and you're made whole (or as close to as possible), but if they really are missing then you get up to £85k compensation (as I understand it).
Ultimately the best thing you can do is use well established and capitalised names with transparent accounts and strong track records of compliance and profitability. Personally the thing that bothers me more than all this, and which I think is a pretty good reason nowadays for diversifying providers, is the very plausible risk of a cyber incident or IT f
kup rendering a platform temporarily inaccessible when you need it.
If client assets haven't been properly segregated (either through negligence or malfeasance), then FSCS kicks in and underwrites the cost of going after them - so ideally they can be found and returned and you're made whole (or as close to as possible), but if they really are missing then you get up to £85k compensation (as I understand it).
Ultimately the best thing you can do is use well established and capitalised names with transparent accounts and strong track records of compliance and profitability. Personally the thing that bothers me more than all this, and which I think is a pretty good reason nowadays for diversifying providers, is the very plausible risk of a cyber incident or IT f
kup rendering a platform temporarily inaccessible when you need it.Gassing Station | Finance | Top of Page | What's New | My Stuff