Reply to: SIPP FSCS Protection

[OwlHoot]

Err, when did that (UK default on sovereign debt) happen?

1672

So you see, they just can't be trusted

[DimPrawn]

Reply from SIPP provider:

Thank you for your email.

Investors are likely to be covered by the provisions of the Financial Services Compensation Scheme (FSCS), if Hargreaves Lansdown ceases trading. It can award up to £50,000 in compensation to any one investor where they decide that an investment business is in default and is unable to satisfy any claims against it. In addition, if one of the banks which we use for depositing cash balances is declared in default, each individual is entitled to 100% of the first £85,000 in total in compensation for losses across all their deposits with that institution.

All client money is held by us on trust and is segregated from our own funds in accordance with the FCA's client money rules and guidance so that any creditors of Hargreaves Lansdown would have no legal right to it and we cannot use any of this money to cover Hargreaves Lansdown's obligations. Client money in the Vantage SIPP and PMS SIPP is held in separate SIPP client bank accounts which are segregated from other money held by us.

Our senior management and Treasury Committee are responsible for periodic reviews of the institutions with which our deposits are held and the proportions in which they are held. The security of the institutions we use is paramount; we monitor the performance and security of the banks we use daily to ensure we are able to anticipate and react to changing economic and institutional conditions.

Our policy is to only use banks with a UK banking license which are covered by the Financial Services Compensation Scheme (FSCS). The FSCS is backed by government and protects clients’ deposits up to £85,000 in the unlikely event that a bank, building society or credit union defaults. A client’s individual protection will depend on their aggregate balances held by that institution.

We have continued to maintain a conservative approach on which of these banks to use, preferring those which we believe the government would fully support in any further financial crisis.

Stock you hold with us is held in the name of or to the order of Hargreaves Lansdown Nominees Limited, or by an approved third party custodian. Hargreaves Lansdown Nominees Limited is a non-trading company so it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. We maintain detailed records of all your investments and assets for which you will at all times remain the beneficial owner. We do not lend stock held in the Vantage or PMS Services.

Our senior management and CASS Committee are responsible for periodic reviews of the nominees with which stock is deposited.

[AtW]

They've seen the UK default.

Err, when did that (UK default on sovereign debt) happen?

[TwoWolves]

Hence why 99% of your money is better placed into property.

If you buy a 17 bedroom country pile set in 5 acres, and the world goes tits up, you still have a 17 bedroom country pile set in 5 acres.

A pension pot on the other hand, will be worth £50K tops when the big crash finally arrives....

Which is exactly why the Boomers are buying property like mad and fueling the bubble in property. They've seen the UK default.

[Hobosapien]

Correct. Just not in the UK.

Has Elon Musk started selling plots of land on Mars yet?

[sasguru]

Hence why 99% of your money is better placed into property.

Correct. Just not in the UK.

[barrydidit]

The good news is that you won't have to dwell on it for too long if it does happen

https://www.independent.co.uk/news/h...-a8287001.html

[Hobosapien]

As a self investor you need to be registered with the FSCS to get compo if you fail, unless you're too big to fail and get a government bail out.

Those too small to be bailed out will be bailing in. e.g. cash in a bank is just a creditors entry on the company accounts, a list of people that won't get their money back.

You have just discovered the reason why SIPPs were brought about, to protect the banks and investment companies that run the government, so they can offload the responsibility to individuals. Should have read the small print. Some of it written in invisible ink.

[jamesbrown]

I've asked my SIPP provider what will happen when Komrade Korbyn get in, and turns the UK into another Venezuela, minus the weather and the women...

In that case, all sensible employees at your preferred SIPP provider will transfer your investment funds into their personal bank accounts and retire to North Korea for its more liberal regime, thereby fecking you over goodly.

[DimPrawn]

This is regulated by the FCA (CASS). In other words, yes, there is a none trading trustee company, but you retain the beneficial ownership of all investments. Thus, it's ringfenced in law. There may be some specific FUBAR scenarios though... of course, if all the money is in cash, and we're talking about a sas-sized pension pot then, yes, your millions could be at risk.

I've asked my SIPP provider what will happen when Komrade Korbyn get in, and turns the UK into another Venezuela, minus the weather and the women...

[jamesbrown]

Are you the beneficial owner of the investments or are they pooled? I don't expect the SIPP provider holds the investments directly in your name, but one nominee account on the share register. The FSCS says that claiming compensation for the investments held will be on a case by case basis. Sounds complex and somewhat worrying vs the 100% limitless cover for a stakeholder pension.

This is regulated by the FCA (CASS). In other words, yes, there is a none trading trustee company, but you retain the beneficial ownership of all investments. Thus, it's ringfenced in law. There may be some specific FUBAR scenarios though... of course, if all the money is in cash, and we're talking about a sas-sized pension pot then, yes, your millions could be at risk.

[DimPrawn]

But if the money is invested, so what? You will remain the beneficial owner of any investments if the asset manager goes tits up. If it's a cash balance, it's probably held in a bank covered by FSCS, but only up to the FSCS limit. If you're invested in a company and that company itself goes tits up then, sure, you lose that money, as with any investment.

Not really sure what you're saying...?

Are you the beneficial owner of the investments or are they pooled? I don't expect the SIPP provider holds the investments directly in your name, but one nominee account on the share register. The FSCS says that claiming compensation for the investments held will be on a case by case basis. Sounds complex and somewhat worrying vs the 100% limitless cover for a stakeholder pension.

[jamesbrown]

But if the money is invested, so what? You will remain the beneficial owner of any investments if the asset manager goes tits up. If it's a cash balance, it's probably held in a bank covered by FSCS, but only up to the FSCS limit. If you're invested in a company and that company itself goes tits up then, sure, you lose that money, as with any investment.

Not really sure what you're saying...?

[barrydidit]

What's the betting if it went tits up then Hector would ask for his CT relief back

[DimPrawn]

Hence why 99% of your money is better placed into property.

If you buy a 17 bedroom country pile set in 5 acres, and the world goes tits up, you still have a 17 bedroom country pile set in 5 acres.

A pension pot on the other hand, will be worth £50K tops when the big crash finally arrives....