Your Industry  

Same fund held in two separate products

This article is part of
Guide to Financial Services Compensation Scheme

The FSCS says it may be able to consider a claim where an investor has been advised to purchase a Sipp by an authorised financial adviser, who is no longer in a position to consider claims themselves, usually due to insolvency.

Such claims would be considered under the FSCS’s investment limit which is £50,000 per person, per failed firm.

Once a Sipp has been set up, a consumer may decide to hold a variety of products such as investments, deposits or insurance within the Sipp.

Article continues after advert

These may be held directly with the Sipp providers or with separate providers such as a fund manager, deposit taker (bank or building society), or insurance company.

If a claim were to arise due to the failure of one of the underlying products held in the Sipp, the FSCS says it may be able to assist as long as the underlying product provider is authorised by the FCA or the PRA.

The limits of protection would depend on the type of product held. Any cash held directly with a bank as part of a cash Isa would generally be covered by the deposit limit of £85,000.

However, if the cash were held with a Maxi Isa - a combination of stocks and share - as they have an investment element they would be subject to the £50,000 investment limit.

A spokesman for the FSCS says it is important to note that the scheme’s staff generally look through tax wrappers (for example, Isas, Peps, Tessas, etc) when assessing claims.

A spokesman for the FSCS says: “The wrapper is not the important part. The real questions are whether the underlying product falls within a protected claim (for example, a deposit) and whether the firm in default owes the claimant a civil liability.”