What happens if Freetrade goes bust? (which of course won't happen!)

Help 👋
45

What? You can’t hold £122bn in cash in FreeTrade?

I’m out! Sailing with my hydrogen powered yacht back to Monaco.

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46

You could have temporary high balances due to selling positions before purchasing/transferring
 Lucky fscs covers that too, but only up to £1m for up to 6 months.

/MoMoneyMoProblems

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47

Wonder if the FSCS would cover the full ÂŁ122B :thinking:

48

FSCS are funded by charges on PRA/FCA authorised firms
let’s hope they’ve built up enough in their war chest to pay for your 122bn of petty back pocket cash @Marsares and @simonpoole

49

Freetrade Mentioned :+1:t3:

50

So what will you do when you hit 85k? Open with a different broker? They said the money’s in a different pot etc but it doesn’t seem worth the risk.

Not an issue for me for a long while I should add


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51

In summary:

  1. If the broker is a fraud and never segregated your money, you’re protected to £85k
  2. If the broker went bust but did segregate your money correctly, you’re protected without limit
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52

Sorry if this is elsewhere, but pension funds compensation has no upper limit, so inside a SIPP, would we have unlimited protection under FSCS?

53

I think as it’s a SIPP, it’s still subject to the £85k cap?

image

54

Okay, thanks. Just wondered if a SIPP took the same route as a pension through a provider, though it seems not.

55

I see where your coming from. There are some pensions with special provisions that as you say cover the entire pension. They doesn’t seem to apply to SIPPs or all pensions though.

56

I know this has been kicked around a lot but found this article quite useful in explaining what happens with regards to Nominee accounts, CREST, FSCS protection:

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57

Not really asking for if broker goes bust more just what proof do I have except an app on my phone that I actually owns the shares I bought?

58

Hi @RachG

This will probably explain as best as you can. Gone are the days when you’d get a paper certificate for your shares. Maybe one day all this will be on an decentralised block chain but I wouldn’t hold your breath.

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59

Thanks.
Yes having just spent a week doing a deep dive into crypto and NFTs and block chain I think its fair to say most will crash and burn. Its very much like the early years of the internet, load of crap, lot of get rich quick scams, ponzi schemes. Think the technology has its place and will evolve and be useful but can’t personally see the value in holding a link to a jpg of a very badly drawn ugly ape! My dog could do better.

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60

I have 3 nft that are directly connected to a crypto, but apart from them I’m not sure what is of any value or how to value it.

For coins I think they need to have a utility and be capable of scaling. If they have a utility but cannot be used by millions they will die and another will replace it. If they can be used by millions and have no utility they are almost certainly a meme coin and will die.

Etheroum, Solana, Avalanche, Phantom, Polygon, Algo and the list goes on of coins that actually provide a purpose.

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61

If you own investments domiciled beyond the UK – say in Ireland or Luxembourg – then the FSCS safety net doesn’t protect you at all.
That’s basically almost all ETFs.

62

Thats not entirely accurate. FSCS protection may be used at the decisions of the FCA for other costs as well. Generally its unlikely that you’re investment its self will be lost if correctly setup, you will need to pay fees though for the administration of the failed firm and costs for transactions and transfer of asserts to a new firm. FSCS has in the past covered this cost, and this costs isn’t as far as i can tell dependant on the domiciled location of the ETFs so long as you’re failed broker was a UK company.

Save you’re statements and bank transactions?

Freetrade is really poor on reporting. You can also ask them for a (pretty crap) csv of all your transactions.

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63

So many of them and all quite confusing. Found a couple of good youtube channels and think have found maybe 15 I’ll put a little into to spread risk.

64

I’d be keen to know what freetrade would do in the event of "unreconciled difference s or what this arrival can term the “break account”. It’s a bit of a read but it’s well worth it.