As a starting point Iāve read the Security section on the website as I was trying to understand what would happen in the event of a disaster.
Iām an investor with Freetrade so donāt shoot me down for asking, but assuming the Freetrade app stopped working tomorrow, what would I need to do to prove to the entities that hold my UK and US stocks that I own X shares of Y stocks? Also, are we only covered for Ā£85,000?
How would I convert my stocks back to cash or import them into another broker (if thatās even a thing?)
Iāve seen contract notes in app but these would be useless if I couldnāt get into the app and the exports in the activity section arenāt particularly useful as there are no order IDs. I have a small holding in trading212 (I wanted to try the pies feature) and I like how they send me a contract note email which gives me piece of mind and feels like a receipt in a way.
Maybe you could prove ownership of stocks through monthly statements, although if the app crashed and youāve bought more stocks or deposited cash within the present month you wouldnāt be able to get a new statement for that month itād just be the one you have saved from the previous month.
Side note: would be nice if Freetrade could email us our monthly statements direcly as well as showing them in the app.
This scenario Freetrade would still exist (though perhaps wouldnāt survive the fallout of lack of trust in their service). I imagine they would restore from backups and everyone would pull their assets to somewhere more stable.
But I imagine your thinking more along the lines that Freetrade completely collapses and in the process lose all client information. While this is extremely unlikely (like never going to happen), itās essentially up to you to keep records of your own finances. Soā¦ back up your statements.
You wouldnāt, they would, looking at the terms of service Freetrade sell assets and return money on most cases. Fractionals also canāt be transferred, they have to be sold. So I imagine any administrator would likely go down the sell route and return the moneyā¦ perhaps?
This comes down to a decision on your part. If you dont trust the company and itās structure to protect your money sufficiently then you simply shouldnāt have your money with them. Itās that simple. But the coverage would attempt to cover any shortfall and fees ultimately (thereās probably going to be fees)
No itās not. The limit is 85k. See the example above
There is a small number of retail clients (fewer than 10) for whom the costs of distribution and any shortfalls will be over the FSCS limit of Ā£50,000, and those clients will have to pay any costs over this limit.
Those clients who are not eligible for FSCS compensation ā or have specifically requested not to receive FSCS compensation ā will need to pay the costs of distribution of the client money and custody assets, and if there are any shortfalls will not receive back all their client money and assets. There are various options for these clients to pay the costs of distribution of custody assets which are set out in the Distribution Plan.
The 85000 is just for fraud committed by freetrade. Without fraud, the cover is limitless in the sense that all stocks are held in accounts that freetrade cannot access.
It doesnāt just cover fraud. The cover is not limitless, that freetrade wonāt use the assets is not a guarantee of cover. I donāt think itās wise to frame it as such. As you can see from the fca themselves, you are not guaranteed to have ālimitless coverā
Not sure you misunderstood me or the topic itself. Assets are kept separat from freetradeās accounts. So the only way you can lose them is by freetrade committing fraud by using them. In this case, the FCA will cover you up to 85k. Otherwise, thereās no way to lose your assets.
I suggest you read the example fca news regarding Beaufort as a real world example of some of the potential reasons the fscs may cover things like shortfalls and fees.
However regardless, it simply doesnāt matter if the assets are held separately, thatās not limitless cover. Assets may be re-valued, there are fees, and the administrator may seek to use some client assets to cover administration costs if there isnāt enough money to cover it.
You are only covered up to 85k through the fscs, you do not have limitless cover.
I agree the confirmation receipts have a lot of what feels like useful information in them should I need to prove that I bought shares.
However the monthly statements only show the number of shares I own in each stock which doesnāt seem that useful.
My issue with this is that screenshotting each confirmation is a lengthy process and both pieces of proof are still IN the app, if access was locked off this would be a problemā¦an export of some sort would be really nice for piece of mind.
I do trust Freetrade would do the right thing if the time came. I guess after having recently chased up a recruiter for Ā£000s owed to me for 2 months you learn that when it comes to survival getting access to what is yours can have some obstacles.
I just wanted to learn more about the process here as Iām building up the amount invested quite a bit now.
I agree, an email summary of your shares proof of holding should be possible to generate manually as well as a proper monthly report, not the measly excuse of a poor statement currently in place