ablender
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Post by ablender on Apr 6, 2016 11:52:18 GMT
Aren't platforms holding client money in Banks?
ex:
SS Barclays
AC Barclays
MT segregated account (but cannot find which)
What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually.
Also if more than one platform uses the same bank, how will this effect the amount of protection?
These are all valid questions, but for the time being I need questions related to how IFISA account itself is going to be set up and run.
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adrianc
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Post by adrianc on Apr 6, 2016 12:01:12 GMT
Aren't platforms holding client money in Banks? ex: SS Barclays AC Barclays MT segregated account (but cannot find which) What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually. Also if more than one platform uses the same bank, how will this effect the amount of protection? I wouldn't have thought the protection applied to YOU, because it's not YOU who has the account. It's the platform.
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investibod
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Post by investibod on Apr 6, 2016 12:23:22 GMT
I do not understand that any money invested will have any FSCS protection. Money invested will not have FSCS protection. The amount of any FSCS protection for uninvested cash will depend on where the cash is held. In the fullness of time I suppose we'll see statements from platforms that distinguish between uninvested cash and investments. I can see this getting messy with something like the AC sweep cash to QAA option. I assume that cash which had been swept to the QAA would not have protection because it was 'invested', but any cash sitting in the queue to be swept would have protection? I am glad that I do not have to code this.
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investibod
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Post by investibod on Apr 6, 2016 12:25:45 GMT
Aren't platforms holding client money in Banks? ex: SS Barclays AC Barclays MT segregated account (but cannot find which) What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually. Also if more than one platform uses the same bank, how will this effect the amount of protection? These are all valid questions, but for the time being I need questions related to how IFISA account itself is going to be set up and run. Also, what if you already have £75k (£50k) in the same bank that the platform uses? If the protection is per user, then you do not have any (for your funds in the platform).
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ablender
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Post by ablender on Apr 6, 2016 12:51:23 GMT
Aren't platforms holding client money in Banks? ex: SS Barclays AC Barclays MT segregated account (but cannot find which) What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually. Also if more than one platform uses the same bank, how will this effect the amount of protection? I wouldn't have thought the protection applied to YOU, because it's not YOU who has the account. It's the platform. That is what I was thinking at the back of my mind.
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ilmoro
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Post by ilmoro on Apr 6, 2016 12:52:00 GMT
Depends on the definition of how the money is held, if it is held in a nominee account in your name then I believe it is covered. Cash on a stockbroker platform would be held in this way, suspect P2P is probably the same.
We cover deposits held in client accounts, for example by solicitors, and may cover deposits held by nominee companies. FSCS does not protect non-nominative deposits.
Edit
just looked at AC T&Cs
When your application has been approved Assetz SME Capital will open a client account for you. Any funds that you transfer to the client account will be held by Assetz SME Capital entirely separate from the assets and funds of the Assetz Capital Companies.
Each client account will be held by Assetz SME Capital with the Account Bank.
So they are individual accounts and therefore ISTM covered by FSCS
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ablender
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Post by ablender on Apr 6, 2016 12:53:08 GMT
Money invested will not have FSCS protection. The amount of any FSCS protection for uninvested cash will depend on where the cash is held. In the fullness of time I suppose we'll see statements from platforms that distinguish between uninvested cash and investments. I can see this getting messy with something like the AC sweep cash to QAA option. I assume that cash which had been swept to the QAA would not have protection because it was 'invested', but any cash sitting in the queue to be swept would have protection? I am glad that I do not have to code this. You probably have a very valid point here. It would be nice to see what chris has to say about it. Edit: See also ilmoro's post just before this one.
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Post by chris on Apr 6, 2016 13:01:11 GMT
I can see this getting messy with something like the AC sweep cash to QAA option. I assume that cash which had been swept to the QAA would not have protection because it was 'invested', but any cash sitting in the queue to be swept would have protection? I am glad that I do not have to code this. You probably have a very valid point here. It would be nice to see what chris has to say about it. Edit: See also ilmoro 's post just before this one. Cash invested in the QAA is split into two portions. One portion is held in cash in the client money account so, at least as I understand it, would be treated like any other cash. The second portion is invested into loan units the same as any other investment on the platform, and so that would also be treated the same. At any one point in time the lender still has cash and loan units, they just happen to be rebalanced with other lenders constantly as the account grows and shrinks and centrally created investment / sale instructions into loans are actioned.
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ablender
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Post by ablender on Apr 6, 2016 13:47:35 GMT
You probably have a very valid point here. It would be nice to see what chris has to say about it. Edit: See also ilmoro 's post just before this one. Cash invested in the QAA is split into two portions. One portion is held in cash in the client money account so, at least as I understand it, would be treated like any other cash. The second portion is invested into loan units the same as any other investment on the platform, and so that would also be treated the same. At any one point in time the lender still has cash and loan units, they just happen to be rebalanced with other lenders constantly as the account grows and shrinks and centrally created investment / sale instructions into loans are actioned. So will we be correct in saying that the part held in cash will have FSCS protection (per person or just for the whole lot?) while the other half (lent) will not have FSCS protection?
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james
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Post by james on Apr 6, 2016 13:51:56 GMT
What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually. Also if more than one platform uses the same bank, how will this effect the amount of protection? The standard rule is that it is for the investor. This applies to things like share accounts and pensions for example. A single account can be used provided the place holds the records to identify how much belongs to each individual. When the FSCS works out what to pay it first adds up the total amount you have in the bank across all accounts. So if you have accounts at ten platforms it would combine all ten plus your current account, and savings account if any to work out your total amount held. For your questions list: Is uninvested cash held in a deposit account, a share account or something else (and if something else, how does it comply with the ISA requirement to use one of those two?) and how much FSCS protection is provided by the type of account used, if any? Is the protection increased through the use of accounts at more than one institution with the client money split between them?
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james
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Post by james on Apr 6, 2016 14:08:48 GMT
There is also the general condition in reg 6(3)(b) that "investments, or rights in respect of investments, may not at any time ... be purchased from (i) an account investor, or (ii) the spouse or civil partner of an account investor, so as to become account investments under an account to which the account investor subscribes or has subscribed." On the face of it, this conditon would preclude any sales by lenders to their own ISAs. However, on many (but not all) platforms, "sales" take the legal form of a redemption and new issue. This fig leaf may well be enough, where it is available. But transactions will still have to be at a fair market price. I agree with you about the fair market price and the Guidance Notes also cover that in 10.7 and 10.8 so I've struck out that paragraph in my earlier post. So far as bed and ISA goes, 10.5 says: " Managers may not purchase investments from
o the investor, or
o the investor’s husband, wife or civil partner
so that they become investments in an ISA to which the investor subscribes or has subscribed." But the IF ISA specific rules: " 9A.8 Peer-to-peer loans held outside of the ISA wrapper cannot be sold, and repurchased inside an innovative finance ISA except where the loans are sold and are made available for purchase (using cash held by the ISA manager), at the same price, by any lender in the open market. That is, the loans must be available for purchase by more than one prospective purchaser.
It will not therefore usually be open to a platform to purchase a lender’s portfolio of loans and for the proceeds to be used to reacquire the same loans inside the ISA wrapper. Any purchase would need to be of loans made openly available to any prospective lender." seem to envisage buying the loans from the original investor as a permitted activity and as usual I'd expect the more specific to override the general. That would certainly be sensible given the liquidity issues, provided the price is not daft. Of course determining when a price is daft can be non-straightforward at times.
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Post by chris on Apr 6, 2016 14:23:12 GMT
What is not clear is, whether we get a £75k (£50k) protection for each platform (divided over all the lenders), or whether we get £75k individually. Also if more than one platform uses the same bank, how will this effect the amount of protection? The standard rule is that it is for the investor. This applies to things like share accounts and pensions for example. A single account can be used provided the place holds the records to identify how much belongs to each individual. When the FSCS works out what to pay it first adds up the total amount you have in the bank across all accounts. So if you have accounts at ten platforms it would combine all ten plus your current account, and savings account if any to work out your total amount held. For your questions list: Is uninvested cash held in a deposit account, a share account or something else (and if something else, how does it comply with the ISA requirement to use one of those two?) and how much FSCS protection is provided by the type of account used, if any? Is the protection increased through the use of accounts at more than one institution with the client money split between them? The "uninvested" cash sits in the client money account with Barclays. I don't know the precise spec of that account beyond knowing it doesn't pay us any interest. Best send a question in to the customer service team as they'll have info on the precise nature of the account and how it is covered by FSCS or not.
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pikestaff
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Post by pikestaff on Apr 7, 2016 6:34:05 GMT
...So far as bed and ISA goes, 10.5 says: " Managers may not purchase investments from
o the investor, or
o the investor’s husband, wife or civil partner
so that they become investments in an ISA to which the investor subscribes or has subscribed." But the IF ISA specific rules: " 9A.8 Peer-to-peer loans held outside of the ISA wrapper cannot be sold, and repurchased inside an innovative finance ISA except where the loans are sold and are made available for purchase (using cash held by the ISA manager), at the same price, by any lender in the open market. That is, the loans must be available for purchase by more than one prospective purchaser.
It will not therefore usually be open to a platform to purchase a lender’s portfolio of loans and for the proceeds to be used to reacquire the same loans inside the ISA wrapper. Any purchase would need to be of loans made openly available to any prospective lender." seem to envisage buying the loans from the original investor as a permitted activity and as usual I'd expect the more specific to override the general. That would certainly be sensible given the liquidity issues, provided the price is not daft. Of course determining when a price is daft can be non-straightforward at times. How can the guidance override the law? According to the law, the rule described in 10.5 applies in all cases.
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ablender
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Post by ablender on Apr 7, 2016 7:40:13 GMT
...So far as bed and ISA goes, 10.5 says: " .....How can the guidance override the law? According to the law, the rule described in 10.5 applies in all cases. Perhaps there will be the required change in the law to accommodate this. !!(thinking)
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pikestaff
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Post by pikestaff on Apr 7, 2016 7:58:46 GMT
...Perhaps there will be the required change in the law to accommodate this. !!(thinking) Highly unlikely but you could always write to your MP. Mine's Nadine Dorries  I don't think it would be up her street.
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I don't think it would be up her street.