How is my money protected?

Investment firms such as Fidelity are very different from banks because we are required to separate client money and assets from our own resources. We are not permitted to use client money and assets in the course of our own business activities, and your money would be ring-fenced in the unlikely event that we became insolvent. In the case of Fidelity’s default, the Administrator appointed is entitled to claim their costs for distributing client money and assets from this ring-fenced client money pool. Any shortfall will be covered by the FSCS up to a limit of £85,000 per client. If one of the banks which we use for depositing customer cash balances is declared in default, each customer is entitled to 100% of the first £85,000 in total in compensation for losses across all their deposits with that bank (this includes any cash holdings they may have under the same bank outside Fidelity, for instance, in a current or savings account with that bank.)

When you invest through a distributor like Fidelity, any cash held on your behalf is placed with a range of different banks in designated client bank accounts. As the cash is kept completely separate from Fidelity’s own money, if we became insolvent it would be returned to you in an orderly manner.

When you invest in funds, they are held by Fidelity using a nominee structure. This allows us to administer your investments efficiently, while ensuring that you are clearly identified as their owner. This means that in the unlikely event of Fidelity becoming insolvent, any money we owe will not be paid out with your funds. In fact, your money cannot be accessed by any creditors.

For mutual funds such as OEICS or Unit Trusts, a trustee or depositary holds the legal title to the underlying stocks in the fund (i.e. they are not owned by the provider). This means that if a provider, such as Fidelity, gets into financial difficulty, your investments would be protected from its creditors according to existing rules and regulatory limits.

The FSCS would only apply to your investments if the protection measures that distributors and providers have in place (as described above) were to fail.

The FSCS might apply if you lose money because your investments have not been administered correctly, or as a result of misrepresentation or fraud, and the authorised firm concerned has gone out of business and cannot pay compensation or return your investments or any cash held on your behalf.

The FSCS will not pay compensation if your investment performs poorly as a result of market conditions.

Yes. The maximum amount of compensation payable to an individual under the FSCS will depend on the type of financial product that you hold and who the claim is against.

• If a provider is in default, the limit is £85,000 per provider for UK domiciled mutual funds (OEICS and Unit Trusts).
• If a distributor is in default there is a limit of £85,000.
• If one of the banks used to hold client money is in default then the limit is £85,000.

If you would like to know more, please visit the FSCS website or call the FSCS on 0800 678 1100.

Yes. The limit is still £85,000 per investment provider regardless of whether you hold your investments with one distributor or whether you hold them across multiple distributors.