I have well in excess of £85,000 in stocks and shares ISAs with one company

I have well in excess of £85,000 in stocks and shares ISAs with one company. Would you advise me to transfer some to another company just in case they should go bust?

Hi. The £85,000 you reference actually applies to cash – it is the Financial Services Compensation Scheme (FSCS) and applies to banks. 100% of the first £85,000 is guaranteed per institution. It’s different for stocks and shares. In terms of investment funds on a platform, UK-based fund managers are authorised by the FCA. Clients will therefore be protected up to £85,000 if a fund manager becomes insolvent and, as a direct result of this, investors lose money.

There are separate rules governing assets held on investment platforms. In terms of client cash, the rules require platforms to hold cash in trust accounts with authorised UK banks. These accounts carry a client money designation, and they’re monitored and reconciled on a daily basis.

As for client assets and investments, importantly these must be held separately in the name of a nominee company or authorised third-party custodian.

These measures prevent client cash and assets becoming mixed up with those belonging to the platform – so it should be easy to identify and return funds belonging to investors should the worst come to the worst. If you invest with a platform, find out who their custodian is. This should ideally be a large global institution – and it is them holding your money, so if the platform itself goes bust, your money is not at risk.

Holly