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As the Financial Services Compensation Scheme is up to £85k, should I invest in another company or take advantage of the power of accumulation and put it in my Vanguard?

10 February 2022

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Question by Martin

I have a Stocks and Shares ISA with £90k in a Vanguard life strategy. I have 20k lined up come April to put this in the account to make it £110k. However with the Financial Services Compensation Scheme being up to £85k should I invest in another company or take advantage of the power of accumulation and put it in my Vanguard? What I'm trying to ask is should I be worried considering Vanguard have billions if not trillions of money?


Answered by Dan Willers

Hi Martin,

I hope this finds you well.

Thank you for your question. I hope my response below will go some way to helping you.

Vanguard are a very large fund management firm, and therefore I would imagine quite secure and financially healthy. Most firms of this size tend to use the services of a custodian. What this means is that your invested funds are not physically held with the firm you invest with, so Vanguard in your case. They are held by the custodian firm whos job is to ringfence the funds from Vanguard, so in the event that they ever defaulted your money would be safe.

You are still covered by the Financial Services Compensation Scheme up to £85,000 as you have mentioned, but funds over and above this amount should also be safe if they have an appointed custodian. Having had a quick look on their website, this would seem to be the case. I have shared the link below with you which you can access and take a look at yourself.

https://www.vanguardinvestor.co.uk/need-help/answer/what-happens-to-my-money-if-vanguard-become-insolvent

I hope that helps you, but please don't hesitate to get in touch further if I can be of additional assistance.

Best Wishes,

Dan Willers
Chartered Financial Planner
Robertson Baxter Ltd
www.robertsonbaxter.com

Answered by

Dan Willers

Chartered Financial Planner

I've been in financial services for more than 18 years and have been with my current firm, Robertson Baxter, for six years. I specialise in investments, pensions, tax planning protection and estate planning, but first and foremost focus on building long-term relationships with my clients.