Freetrade Competitors

[ralf]

@Eden

In reality the 85k protection isn’t really used for your investments themselves, they aren’t disappearing. The only case where this were to likely happen is if an investment company wasn’t buying the investments at all. But that’s such an out there idea im not going to specifically address it.

You say this is an “out there” idea, but if you consider GME, it’s clear that even if the brokers have been buying something, it’s not necessarily a sure thing that they’ve actually bought real shares.

And even though I’ve invested quite a lot into e.g. Amazon and Google, I still don’t own a full share of them.

@Eden

The reality is your investments are held in a separate nominee company or other third party custodian, not by Freetrade. If they were to go bust, your shares don’t just disappear with them.

That just pushes the problem further down the line. OK, so if FT goes bust the protection will cover the assets they are directly looking after. But if for example all our shares are in one ETF, then we will still only have a maximum of £85k protection if that broker or ETF company goes bust.

I don’t understand why people don’t think of this as a big deal. To me it’s telling that SIPPs are explicitly called out as max £85k protection but legacy pension funds have unlimited protection. If shares were that safe in the event a company went bust, why wouldn’t SIPPs also get unlimited protection in line with pensions (which are generally also just managed stock market investments)?