I agree completely with the most recent posts by soi and j_westlock. These are scary events and I have real sympathy for Ripley94. To others reading these posts this should be a wake-up call to consider the safety of your own broking arrangements. In particular I suggest you ask yourself the following questions:-
- How are your broker(s) doing ?. Are they big successful and profitable companies and therefore less likely to go bust ?. If you are using some small broker just because their fees are low is that something you are still happy to continue doing ?.
- Are your broker(s) FSCS protected ?. If you don’t know the answer then take action to find out.
- Do you have more than £85,000 invested in one broker and hence have gone beyond the FSCS protection limit ?. If so maybe you should consider using more than one broker. But remember if you have a partner or spouse then they can have a separate account with your current broker and holding half your investments in their name can provide a further £85,000s worth of FSCS protection at the one broker.
- Do you have your own up to date set of records documenting your holdings at each broker ?. If you had to go to the FSCS (or an administrator perhaps ?) and describe exactly what you had could you do so ?. Don’t rely on your brokers website still being available as if they get into problems it quite likely it won’t be. Personally I download a copy of my portfolio from my broker monthly and also keep a copy of ALL my contract notes forever on my computer.
If you are really freaked out by the risk of a broker failing then you could consider holding paper certificates for some holdings (though these will then be very difficult to trade) and you might consider trying to find a broker where you can have a personal Crest account (but this will probably cost you something). Both these methods will get your name on the share register eliminating the nominee account risk.
There can be all sorts of reasons for having different broker accounts. You might well need different accounts for spread betting, ISAs, SIPPs, foreign currency accounts, Options trading etc. depending on the trading activities that you do and your own financial arrangements.
While opening accounts with different brokers is usually pretty easy making transfers between them can be time consuming and error prone - I have seen numerous reports of people who have had problems posted on these boards. That’s not a good reason not to do it but it is worrying.
Most brokers now will offer the option to transfer your holdings as shares from your existing broker (an “in specie” transfer) - this avoids the costs associated with selling your holdings and buying them back at your new broker. But this can be a source of delays and errors. There is also likely to be a charge for this levied by the broker you are transferring from. Some brokers will offer to cover any charges made by your existing broker if you transfer. When transferring brokers you should be aware of the fact that you are not going to be able to trade while the transfer Is going on (which can take many weeks I believe) and you will effectively be out of the market for that time (if you transfer in cash) or be unable to trade (if you do an “in specie” transfer).
I have been around this buoy several times before in the past myself and this is a summary of my personal thoughts on the issue. While I believe it to be correct I cannot 100% guarantee it - I can only repeat that you would do well to take some timeout to consider this whole area if you haven’t done so already.
Ripley once again I hope that everything works out OK for you.