Do I need to consider FSCS limits for my shares ISA?

If I stick £90k into a cash ISA then £85k of it is covered by FSCS ( unless I have other cash with the same licensee). Fine.

Am I right in thinking that it’s completely irrelevant for the funds/shares element of a Shares ISA, eg AJBell?

Ie, even if AJBell goes bust, I would still own the shares of the companies I had bought stock in. The only issue would be if I had £85k+ cash sat in the ISA waiting to buy shares ( chance would be a fine thing)

‘zat right,?

PS, no I don’t.
PS2, sorry.

if its directly shares I think you’re right, if you’re in a fund thats tracking shares (ie a ftse100 tracker) then you’re at risk (the fund can technically go bust if its been mismanaged) but I don’t think the FSCS helps you either way

If you hold a cash ISA with an authorised firm your money is covered up to a limit of £85,000 per person,

Are investments guaranteed by FSCS?

HL provide a decent summary: https://www.hl.co.uk/security-centre/how-safe-is-your-investment

Thanks for the links irc & silly, but I’ve got to admit I’m still not clear. The following bit seems to be relevant:

Stock you hold with us is held in the name of or to the order of Hargreaves Lansdown Nominees Limited, or by an approved third party custodian. Hargreaves Lansdown Nominees Limited is a non-trading company so it cannot run up liabilities of its own and Hargreaves Lansdown accepts full liability for any default by our nominee company. We maintain detailed records of all your investments and assets for which you will at all times remain the beneficial owner. We do not lend stock held in our HL or PMS service.

And is a bit worrying. It seems to suggest that actually HL nominees hold the shares on my behalf and thus if the shit did hit the fan then I might indeed be out of pocket for anything beyond the FSCS limit.

Recommendations of who to open a 2nd Shares ISA with please ?

Not clear where the money is coming from, but to point out the obvious that you can only invest £20,000 into a cash isa per tax year. I assume you are transferring in from existing cash ISAs into a single one?

Sorry, despite my best [ feeble] efforts at explaining, I am not interested in Cash ISAs. My first statement was intended to put off the various people who I knew would dive into the thread and helpfully tell me about Cash ISAs.

My question is: For Shares ISAs only, do I still need to be mindful of the £85k FSCS limit, or does the fact that I don’t actually hold much [any] money with AJBell mean that I have nothing to worry about?
Ie if AJBell go bust, will I still effectively have my shares in the various companies that I bought via my ISA?

OK more ( imaginary) detail
Supposing I had £50,000 of Rolls Royce shares and £50,000 of BP shares, and £20,000 cash all sat in my AJBell Shares ISA.

If AJ goes bust really badly bust and the creditors are all over it, do I:
1) Walk away with my £50k of RR shares, my £50k of BP shares and my £20k cash from FSCS?

2) walk away with just £85k from FSCS, since ” my” shares were actually being held under a central AJBell fund and they are treated just like cash as far as ownership and compensation goes?

Interesting question. The shares won’t be in your name, so I’d expect at best option 2. There may be complications if you invest in none UK stocks which are held by a foreign custodian that isn’t covered by the FCSC.

The shares won’t be in your name

Mmm yes. I think that’s the bit I got wrong in my original assumption. Kinda naive of me to think they’d actually have xthousand separate holdings for each customer x shareholding.

You do indirectly, you do not have a cash account with AJ Bell acting as principal, they hold cash on trust for you with banks or in money market funds and you are at risk if those banks go bust – not A J Bell – so if you have £50,000 in a Barclays deposit account and £50,000 in a cash in an iSA with A J Bell then if A J Bell deposits your cash with Barclays you will hit the FCSC limit. Shares will be held on trust too.

Everything is a pass through and you shouldn’t be exposed to A J Bell credit risk other than the time it would take to sort things out if they went bust. Obviously if there has been fraud, then all bets are off.

If you hold shares (or investment funds) via a platform such as AJ Bell, they hold them as nominees, which means they are registered as yours but they manage them. If the platform goes bust, they can’t touch your assets. So FSCS compensation is irrelevant if the platform fails, unless they are criminally fraudulent and don’t separate your assets.

If your shares are in a trading or manufacturing company, say, Rolls Royce, and they go bust, that’s your risk. You might be protected if your shares are in an investment company (getting close to limits of my knowledge)

The more complicated situation is where you buy funds, from a provider such as Vanguard or Fidelity. If the provider is FSCS registered, my understanding is that if they go bust, you are protected up to the limit (currently £85k). So you could have £85k of Vanguard funds, and £85k of Fidelity funds, etc, and be protected. That limit applies if you have funds with more than one platform, ie, £50k of Vanguard through AJ Bell and £50k through Hargreaves Landsdown, you’re only protected for £85k.

Something I wonder about is that the £85k was set because it’s about 100k Euros, which suggests it’s an EU scheme and may be on the list for scrappage. I’m also unsure if it applies to investments outside the UK (some of the Vanguard funds are based in Ireland).

Think the level of protection was raised a few years ago. Not sure there’s any link to the EU.

Protection is per institution however so note that a subsidiary of HSBC and HSBC themselves count as one institution. So If HSBC went to the wall you’d only get a maximum protection of 85k even if you had more invested with their subsidiary.

AIUI (and I’m not an expert) your funds are held by a ring fenced holding company, NOT the operating company that you trade through. This prevents your funds being used as assets during a winding up procedure.

Should the investment platform go belly up your assets would still be owned by the holding company. There should be a paper trail back to your name, to enable you to get access to your funds / money. But in a worst case scenario of insolvency this could take months \ years.
It’s recommended to keep records / evidence of what you own to help during this scenario – think worst case the trading platform no longer operates / has no employees,

I Think monevator has covers this and has a guide,

It seems to be the same for a Vanguard fund as any other S&S ISA i.e. the shares you have in the fund which owns the stock are held separate to Vanguard itself.

There is also FSCS protection which could cover a shortfall following administration costs.

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