Freetrade security and theoretical next steps if disaster

As a starting point I’ve read the Security section on the website as I was trying to understand what would happen in the event of a disaster.

I’m an investor with Freetrade so don’t 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 £85,000?

How would I convert my stocks back to cash or import them into another broker (if that’s even a thing?)

I’ve seen contract notes in app but these would be useless if I couldn’t get into the app and the exports in the activity section aren’t 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.

Can anyone explain how this would work?

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Maybe you could prove ownership of stocks through monthly statements, although if the app crashed and you’ve bought more stocks or deposited cash within the present month you wouldn’t be able to get a new statement for that month it’d 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.

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Your cover is essentially limitless as its held in a separate account and can’t be used for business costs even if they close down.

You can access the contract notes in app, I suppose you could screenshot them?

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This scenario Freetrade would still exist (though perhaps wouldn’t 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), it’s essentially up to you to keep records of your own finances. So… back up your statements.

You wouldn’t, they would, looking at the terms of service Freetrade sell assets and return money on most cases. Fractionals also can’t be transferred, they have to be sold. So I imagine any administrator would likely go down the sell route and return the money… perhaps?

This comes down to a decision on your part. If you dont trust the company and it’s structure to protect your money sufficiently then you simply shouldn’t have your money with them. It’s that simple. But the coverage would attempt to cover any shortfall and fees ultimately (there’s probably going to be fees)

You can see an example of what happens here https://www.fca.org.uk/news/news-stories/information-customers-beaufort-securities-limited-bsl-and-beaufort-asset-clearing-services-limited

No it’s 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 £50,000, and those clients will have to pay any costs over this limit.

Those clients who are not eligible for FSCS compensation – or have specifically requested not to receive FSCS compensation – 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.

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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.

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It doesn’t just cover fraud. The cover is not limitless, that freetrade won’t use the assets is not a guarantee of cover. I don’t think it’s wise to frame it as such. As you can see from the fca themselves, you are not guaranteed to have ‘limitless cover’

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Not sure you misunderstood me or the topic itself. Assets are kept separat from freetrade’s 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, there’s no way to lose your assets.

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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 doesn’t matter if the assets are held separately, that’s 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 isn’t enough money to cover it.

You are only covered up to 85k through the fscs, you do not have limitless cover.

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This is a very important topic.

From what I learnt, the actual ownership of our stocks is with Freetrade (nominee) and we have “beneficial ownership”

Freetrade must email us “proof of beneficial ownership” as soon as trades are made and also monthly

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These are provided by the confirmation receipts within the app and the monthly statements?

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 doesn’t 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 problem…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 £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 I’m building up the amount invested quite a bit now.

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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

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