FSCS max of £85,000 - but what then?

Hi all,

Given that the FSCS protects accounts up to a max of £85,000, I’m curious as to what people have done/will do once their account exceeds this?

This article covers it pretty well:

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Paywalled :roll_eyes:

Just Google: “How are my investments protected - Investors Chronicle”

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Am I right in thinking that Cash in Freetrade is safe up to £85,000 and as our shares are an nomiee account, these can be transfered to another broker in the (very unlikely) event of Freetrade going bankrupt?

Broadly yes, but the £85,000 limit is for a specific bank and if you already hold a balance with that bank of say £5k, then your protection for the FT cash is £80k.

Your investments are protected but an administrator could dip into them to pay their costs in the event of the broker going bust, though you’d be able to claim back and costs up to a cap from the FSCS.


Nothing. Have your investments in a company your happy with.

The £85k is not guaranteed to cover your investments.

£85k covers your cash in the event of a failure of the broker (not the bank if held overseas)
FCSC (as mentioned in the article) have in the past also allowed for the protection to cover administration fees and to cover shortfalls in investments (they never describe what the criteria is for this one).

Ring fencing your assets via a nominee company is the primary protection for your assets, not FSCS protection, however this likely only works if your investments are actually ring fenced (read the terms and conditions of your provider). Investments at freetrade are ring fenced in a nominee account fyi.

FSCS is very likely to cover administration fees as part of the protection going forward I would imagine since they’ve done it before, but I don’t believe they guarantee this. The only guarantee is that your free funds are protected. The caveat is if the underlaying bank fails not your investment provider, in that case the banks protection depends on the jurisdiction of the bank. a non UK bank may have a different level of protection.

Yes. Cash is safe in the event of Freetrade going bust. Cash is safe in the event that the underlaying UK bank goes bust, cash may be safe but not under FSCS protection if the underlaying bank is not a UK bank. (The T&Cs state that where they may hold cash in a non UK bank they will take effort to use ones which have similar protection.

If Freetrade go bust an administrator will likely handle assets, they might charge a fee for this and may charge other fees as well. This would be payable, but as mentioned FSCS have covered this in the past so may likely cover this in the future.


I don’t think this has ever happened without permission?

Beaufort Securities

They never sold assets to cover costs from what I read. They were going to raid cash deposits

There’s no guarantee the same would happen again but in that case it was entirely covered by the FSCS

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Only after massive outcry though :smiley:

That’s true but it’s set an informal precedent which alongside a future outcry would probably be hard for them to ignore

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To be clearer as I’m not sure my response is 100% correct FSCS do state they will cover shortfalls in assets.

If a firm fails holding client money or assets in connection with a type of regulated activity that FSCS can cover, we can compensate if there is a shortfall in your client money/assets

I feel like that’s changed recently. However I think the general tone of everyone’s replies are still correct. You may be covered for shortfalls, you may be covered for fees, and will be covered for cash, but FSCS protection isn’t the primary protection for assets, segregation is.

The reality is short of freetrade somehow losing all your assets and all evidence of them they’re still going to be there. So FSCS protection is always going to be aimed at covering discrepancies not your entire investment.

Pretty sure you can hold a couple tens of thousands in bookmakers and it being very safe to do so. Those that are ranked “high” protection by the Gambling Commission are required by law required to hold client funds in a separate account and must pay you if the bookmaker goes bust. Just an alternative option to think about.

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