Act Now to Protect Your Assets!

We hope that, by now, you have read about the threat to all your broker accounts, including ISAs and SIPPs, that the events at Beaufort Securities exposes, which has been widely reported in the press (e.g. see this article in the Sunday Telegraph: www.telegraph.co.uk/business/2018/05/26/fbi-sting-picasso-scam-collapse-beaufort-could-destroy-trust/ ). If not, please visit our campaign page for a full explanation.

Now is the time for you to act, to protect your own interests and remove the threat that an administrator could raid your accounts to recover their costs, in the event that your broker or platform became insolvent.

ShareSoc is asking you to write to you MP, informing them about this threat and asking them to take action to remove it.

A suggested letter follows, for you to send or email to your MP. For your letter to be truly effective, it is important that you personalise it, where indicated. Please explain why this threat concerns you and how you would be affected if your broker or platform became insolvent and how that threat impacts your saving and investment decisions. MPs will be less likely to act if they simply receive a series of identical letters.

You can find details of your MP’s name and email address at this webpage www.parliament.uk/mps-lords-and-offices/mps/

Suggested letter or email

Dear [NAME OF MP],

I write to highlight my concerns over the special administration of Beaufort Securities, who were one of the largest private client stockbrokers in the UK regulated by the FCA. This case has broad and troubling implications for all UK investors in shares, including those held in ISAs and SIPPs. Over 14,000 clients are directly affected by this matter.

The administrators (PwC) have confirmed that the assets of Beaufort clients (shares and money) were ring-fenced as per FCA CASS requirements and were substantially complete apart from a few isolated deficiencies. Nevertheless, PWC has suggested that it may cost as much as £100 million over four years to wind up the company and return assets at the clients’ expense. Under growing pressure from clients, PwC has recently revised these estimates to £55 million over two years.

[INSERT YOUR OWN SITUATION HERE DETAILING HOW THIS HAS AFFECTED YOU OR WHY YOU ARE CONCERNED]

These estimates are totally disproportionate, given that they represent 10% of the approximately £550 million value of the ring-fenced client property held by Beaufort. Hundreds of clients may suffer substantial losses and hair-cuts, ring-fenced status notwithstanding.

By way of contrast, another broker, Fyshe Horton Finney, which had £300 million client assets was charged less than £3 million by its administrators (Harrisons) following its insolvency. It’s evident that PwC intends to treat this unfortunate incident as an opportunity to fleece 14,000 clients of £55,000,000!

There have apparently been 13 offers from third-party brokers to take over the client assets of Beaufort. A business transfer could resolve the matter quickly and at much lower cost, and such a solution has been used to good effect in previous broker failures.

Because this is a Special Administration under the very flawed 2011 Special Administration Rules, PwC can take its fees out of the client assets/funds held in “ring-fenced” nominee accounts – segregated accounts not available to be treated as assets of the failed business.

In just 2 months, PwC has already spent £6,000,000; That’s a run-rate of £3,000,000 per month to be funded from clients’ assets. There is a clear conflict of interest between the administrators’ duty of care in returning assets to clients in a timely fashion and their corporate motivation to generate fee income. It is very evident that PwC intends to treat this unfortunate incident as an opportunity to maximise its profits at the expense of Beaufort’s clients.

A review of any stockbroker’s terms and conditions shows that clients are not made aware that the cost of returning assets will be deducted from client assets and money in the case of broker insolvency. 14,000 clients invested their life-savings, including ISAs and SIPPs, through Beaufort under the reasonable assumption that ring-fencing provides an effective safeguard. The current debacle makes it clear that no investor is currently safe with any custody arrangement in the UK.

It is imperative that fairness prevails and these clients who entrusted the financial system with their hard-earned life savings have their asset and money holdings returned without cost or delay. The FSCS, which is funded by a levy on financial institutions, must cover any and all costs incurred in returning ‘ring-fenced’ assets to clients.

I request that you ask the FCA to address the following questions:

• What led the FCA to appoint PwC, was there any form of competitive tender process and did they review and agree the extraordinary cost estimates?
• Why have the offers of third party brokers to take over the client assets not been seriously considered?

I ask you urgently to raise this issue with the relevant ministers requesting a review and revision of the Special Administration Rules. The relevant rule is rule 135 of the Investment Bank Special Administration Rules (England and Wales) 2011 (Statutory Instrument 2011/1301).

I also request an enquiry into the conduct of the FCA in this matter, and whether they have acted in the best interest of investors.

Further information regarding this matter can be found here: www.sharesoc.org/campaigns/beaufort-client-campaign/

Yours sincerely

[YOUR NAME]

We thank you for your attention and support. Getting the Special Administration Rules changed and the FCA’s behaviour investigated and censured is in all our interests, as UK Individual Investors.

Mark Bentley
Director

Post Date: May 28, 2018

If Your Stockbroker Fails, What Will You Lose? | SIPPclub says:

30th May 2018 at 10:48 am

[…] The campaign has won its first success, but more can be done. Costs could come down much further, and legislation needs to change for your protection. If you hold any stockmarket assets, please write to your MP using this template letter. […]

Group description:	Our group is interested in sustainable investing and our goal is to identify and evaluate businesses that will thrive through innovation and their transition to a ‘One Planet Economy’. By leveraging the skills of group members, we aim to deeply understand these businesses, particularly focusing on how they develop long-term valuable benefits for their customers. Each year, we plan to evaluate around seven businesses to identify opportunities where our valuation exceeds the market price. A successful outcome is defined as achieving a compound annual growth rate (CAGR), including dividends, of 10% over a decade.
Meeting Type/Venue:	Meetings are in-person in a pub near to Waterloo station in London.
Meeting Frequency/Timing:	Meetings are bi-monthly on a Monday from 10:45am to 4:30pm. Members are expected to also pay for their own lunch which secures the group free use of a private room in the pub. The cost is expected to be £35-40 per person, per meeting, in addition to your SIGnet membership fee.

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Act Now to Protect Your Assets!

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Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	Group focused on active investing, primarily in small / medium cap UK equities.
Meeting Type/Venue:	Regular Zoom meetings interspersed with occasional face to face meetings and social activities in the North West.
Meeting Frequency/Timing:	Monthly on Saturdays at 10am.