Surviving platform fraud or fiasco

Should you – do you – fully trust your platform to look after your investments? Might they hire a budding Bernie Madoff who siphons off your assets to his own account? Or maybe a Mr Bean, who loses track of them altogether? Surely our world-leading regulatory oversight would prevent anything so catastrophic from happening? And anyway, there’s always the FSCS to bail you out if anything does go wrong, right? Well…maybe. In the second of (what I’ve just decided will be) my investment survival series, let’s look at how platforms aim to keep your assets safe. (In case you’ve already forgotten, part one was Surviving system meltdowns and cyber attacks.) Where are my assets? Platforms typically hold client assets in omnibus nominee accounts. That is to say, your fund, equity, and cash holdings are pooled together with everyone else’s. The legal owner of your assets is normally a nominee company or custodian appointed by the platform. You are the beneficial owner, entitled to enjoy the…