I have been contacted by FreeTrade earlier today about two of my stocks which I bought in my ISA (BioNTech SE and Oatly). They are forcing me to either sell them or they will transfer them to a GIA account in two weeks
They sent me the following generic message:
*" Following a recent review, we’ve identified that this security is an American Depository Receipt (ADR) with a privately held security. *
Due to regulatory reasons, ADRs can only be held in ISA accounts if the underlying security is traded on a recognised stock exchange. This is not the case with the BioNTech SE and unfortunately this means that your position is not eligible to be held in an ISA. We are very sorry for any confusion or inconvenience caused here.
In order to comply with ISA rules we must remove all BioNTech SE shares from ISAs, We will do this by transferring any BioNTech SE shares from your ISA to your General Investment Account (GIA) shortly after Wednesday 15th June. Please note that as the value of these shares will transfer to your GIA it will effectively be removed from your tax protected IAS account.
If you would prefer to keep the value within your ISA account please ensure you sell your BioNTech SE shares by Wednesday 15th June. After this date you will not be able to sell your shares while we transfer them to your ISA. You can buy BioNTech SE shares in your GIA, should you wish.
Once again we’re really sorry about this. We’ve identified the issue and taken steps to stop this happening again."
Has anyone else received a similar message. I am really unhappy. I only bought shares in my isa to save being taxed. Share prices have dropped, but I believe in them, so I definitely don’t want to sell and I think they will go up, so I don’t want to be subject to CGT. Therefore I don’t want to move to a GIA and I feel I was sold a complete lie by Freetrade. I never buy shares outside of my ISA.
All advice welcome. I have sent Freetrade a message but they just keep telling me they will log a complaint. I am furious, feel really let down and I’m one of the lucky ones that pays for the premier service so I can write to a customer services rep. I really feel sorry for those that have no way of communicating and asking questions especially given the upcoming long bank holiday weekend.
That sounds like a regulatory issue and not something FT can override (if they want to continue trading that is)
Sound like they made a mistake letting you buy them in an ISA in the first place, but it’s HMRC’s rules not Freetrade’s
completely agree its a regulatory issue but why did FT do this, they should never have sold me something that wasn’t allowed. I expect FT to know better.
I have been sold something that was a ‘lie’. It was an ADR and they are not allowed in ISAs. FT should have known this and certainly not taken a year to tell me, and now I am forced to sell or move to a GIA whilst stocks are down. I’m not happy.
I also doubt this is impacting all trading platforms. I believe there must be some incompetence in the FT team that has led to this. So I’m absolutely furious.
You won’t lose anything by them being transferred to GIA though, you’ll still have the same shares, the only thing you’ll lose is the tax free status if they do happen to make a big profit. and you weren’t entitled to that in the first place according to HMRC rules
I don’t want to use a GIA as then I don’t benefit from my tax protections. I have also lost a lot of money recently on my stocks but I believe they will go up. I only invest using my isa as I want me tax benefits.
It’s a big deal to me.
I am forced to either sell or move to a GIA and I would under normal circumstances just hold in my isa account.
FT should never have sold this to me.
Why did they sell this to me if they were not allowed.
Same thing has happened to me, only bought BioNtech a few months ago for my ISA. ‘Following a recent review we’ve identified this security is a ADR …’
Does this kind of thing happen with other investing platforms? Makes me wonder what else have they missed.
Stamp duty on shares that weren’t exempt i.e. HZM or PAF
As they’re listed on secondary exchanges.
AIM shares are usually exempt from stamp duty being charged, but these two stocks were listed on TSX and JSX respectively, so should have had stamp duty charged, but it hasn’t occurred, currently unavailable to buy (for last couple weeks) until it’s resolved in the backend system.
First thing is recognising and understanding the problem, hopefully leads to process improvements going forward
It happens more often than it should. FT are apparently better than other similar brokers
There use to be a member of this forum @finki who knew a lot about the subject.
What if you bought a stock that shot up so far you decided to sell and take the profit before FT had notified you it wasn’t eligible?
I have a small amount of Biontech shares also and have received the same message. After the initial shock of being informed about FT’s error, I think transferring to GIA is perhaps one option if the individual is happy to do this. However, FT should not be forcing people down this route without due consideration and perhaps compensation. It’s a bit crass to send out a message such as this via the app just before a long-weekend - tells me a lot about their customer service and their SMT. I’m a basic user and so I think the only way for me to contact them is via email as I cannot respond directly to the in app message (I could be wrong about this though).
This problem is entirely their fault (as they have acknowledged) but they have a lot to learn about dealing with people. It’s entirely possible that some individuals could be left with significant gaps in their previous years ISA savings which they cannot easily rectify.
So I do think FT should not be so cavalier in their approach and should be offering to compensate stockholders for any reasonable out of pocket expense - they have already admitted it is an error at their end and they need to put it right for the individuals concerned. I assume The Financial Ombudsman will be very interested if this is not so.
Not sure what the out of pocket expense would constitute to other than the FX fees or FX gain/loss perhaps. Those affected and not happy are in their right to complain and follow that process.
Fair point and I’m not trying to second guess everyone’s personal situation. I’m sure there are literally hundreds of possible scenarios out there. For example, lets pick a random figure of say £100K and assume you have that invested in Biontech via your isa account which you have built up over a number of years. You’re now faced with either selling (possibly at a loss) to keep the funds within your ISA or alternatively you move them to your GIA which does not have the same tax advantage. Either way you could be left with a sizeable hole in your financial plans.
It can obviously be argued that ‘buyer beware’ applies etc but I’m not sure that’s entirely fair in this situation. I simply think if you get something wrong, you apologise and make good your error. Simply saying sorry doesn’t absolve you of responsibility. Words are cheap, actions speak louder than words etc.
For what it’s worth, I’m not angling for any ‘compensation’ I’ll simply move into my GIA and have done with it. But I’m old enough to know that for some people, this could be a bit of a headache and I think FT have a way to go to improve their customer service. That’s the real issue here - not the error. A smarter person than me once told me, it’s easy for a business to bask in glory when things are going well, however it’s when things go wrong that you really see the type of company you are dealing with (or words to that effect).
Enjoy your weekend everyone!
But if you were in the red there would be no CGT to pay, so may as well transfer to the GIA. and if they were in the green you wouldn’t be entitled to the tax relief anyway as it’s not eligible.
The only real problem I can see is if potentially losing some of your £20K pa ISA allowance
I pay for the premium service so I could write to the customer service team to tell them this isn’t right and not fair as I do not want to use GIA. But I didn’t benefit as they just gave me a generic response and told me they would pass on my query to ‘complaints’. Complaints have not come back to me. It’s the long bank holiday weekend and they have not replied to me today despite me contacted them before 12:00 today.
Had I known this was not allowable in an ISA, I wouldn’t have used up my ISA allowance in this way. Now my stocks are worth a lot less due to stock mkt changes, but actually I bought them for a lot more so if I sell them I loose the value they are at now. I do not want to be forced to sell or to use GIA.
I appreciate HMRC set the rules here but FT were at fault and have mis-sold something into my ISA.
The impact is
- I have lost a lot of my allowance as I can’t get it back.
- I will sell at a loss or put it into a GIA and then Pay tax when it goes up
- Had a I known it was not allowable I would have made different decisions.
I do not think the customer service is up to scratch. A generic response like this is just so rude. I would have expected a bespoke apology and a well thought out compensation package and range of options on what they are going to do as this is their fault.
Really disappointed with FT is an understatement.
This is my first post/engagement with this forum and I can see I’m quickly heading down a bit of a rabbit hole!!
I’m not really interested in scoring points, I simply wanted to show some empathy with the original poster. I can see from you profile your an avid and well respected contributor and so I suspect this could go ‘to and fro’ for a while if I’m not careful.
At the risk of repeating myself, I think your ‘assumptions’ are a little too simplistic and will only be true in some instances. That aside, my real concern is with the company (FT), the fact it has sold some stocks in error, the way it has communicated etc etc.
However, I’m not too proud to admit it has been a bit of a learning exercise for me to make sure I understand the ADR/ISA issue and don’t get caught out again - so every days a learning day!
All the best.
Hi @CashCow sorry to hear about how awful AJ Bell have been. But it still doesn’t mean that FT should be allowed to get away with this. I would expect they would be fined heavily by a financial regulator. They shouldn’t be allowed to sell products as okay for an ISA if they are not allowable as the impact on us as customers is priceless.
I think all financial companies that ‘mis-sell’ like this should be forced by financial regulators to compensate customers fairly for the lifetimes worth of ISA allowance that we have lost and also fined heavily.
yes, loosing my £20k allowance and the associated benefits mean a lot to me. I save up hard earned PAYE income to put money into a stocks ISA. I do not have any other investments. It means more to me that some other customers. I hope that makes sense but its not ‘just’ a 20k allowance, it means a lot more to me.