How can I make sure my invested money will be correctly ring-fenced?

Jenny | Greater Manchester| 29/04/2019 | 2

  • Stocks and Shares ISA
  • GIA
  • Other

Jenny's question in full

I've been reading about Beaufort Securities, and how potentially the administrator could have used investor money to cover their costs. What is the best way to avoid the same thing happening to my Stocks and Shares ISA?

Anna Sofat's Response

Beaufort Securities was a stockbroking firm, and in theory money invested in an ISA through them should be ring-fenced (meaning they should separate invested client money from other business money).

However, the governance around keeping client money separate from business money was poor, and so clients funds may have been used by the firm, which is against the requirement of the regulator.

To avoid this happening to you, you should invest via bigger platforms (such as AJ Bell Youinvest or Hargreaves Lansdown) or directly via an ISA provider (such as Vanguard or Fidelity) where the governance should be better.

As soon as you invest, you should receive a contract note confirming your investment.

You can also spend time undertaking your own due diligence (or get your financial adviser to do so), to establish how the firm is separating client funds from their own – we usually look to see who the custodians and auditors are for any fund/ISA we invest in.

Our Expert

Anna Sofat - small.jpg

Anna Sofat

Anna is an award winning Chartered & Certified Financial Planner, as well as the Founder & MD of Addidi, which advises enterprising women and their families, to plan and manage their wealth. Addidi also provides a collaborative club for women to invest in SMEs. Prior to founding Addidi, Anna was the MD at Fiona Price & Partners, the first business set up specifically to provide financial advice for women by women.

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