As my S&S ISA account grows, I am increasingly getting worried about the un-invested cash that floats in it.
I understand the argument that an S&S account is for stock investment and that the T212 stocks are held with the third party and therefore immune to any issues that the T212 as a business might face in future.
With large amounts in S&S accounts, prudent investors may not always invest in their full capacity; amounts may be set aside for expected investments that are based on future events. This amount sits as un-invested cash in their S&S ISA account.
My questions are as follows:
Does T212 offer any form of protection to the un-invested cash as a bank un-invested S&S ISA cash offers (85K protection covers across all accounts per bank account holder)?
if no such protection is offered for the un-invested S&S ISA cash by T212, under what conditions can I recover the un-invested* S&S ISA cash amount?
Does T212 offer mutual transfers of amounts between a S&S ISA and a Cash ISA (both held with T212) ? If yes, how does such transfers between S&S ISA and Cash ISA accounts work?
If the answer is a resounding NO to all the three questions above, I think using T212 as an S&S ISA investment platform comes with huge risks that have not been clearly listed as a disclaimer!
Is there a possibility that T212 will in future allow transfers between S&S ISA and Cash ISA ( if both held with T212)? I believe the new rules allow such transfer so this should be possible. And if there are no restrictions on the number of times such transfers can be taken then there is a way to mitigate the current T212’s S&S ISA risk.
Kindly correct any misconceptions I may have in stating any of the above.
The signed T&Cs does not take away the risks does it, it is only a customer acknowledgement of the T&Cs, which is not a question here.
Is there a limit to how many times I can transfer back and forth between S&S ISA and Cash ISA (both held with T212).? How long does each such transfer take?
We take the protection of all assets very seriously, and there are multiple protection layers that keep your holdings safe.
Uninvested funds in your Stocks & Shares ISA are held in QMMFs, while uninvested funds in your Cash ISA are held in a bank. QMMFs are treated as an investment and not as money held with a bank. In the unlikely event that a QMMF fails to maintain its low-risk strategy, as with any investment, the FSCS protection won’t be available. We carefully select all QMMFs to ensure that they are highly liquid, stable in value and maintain their highly regulated status. If we fail, your investments, such as shares and QMMFs, are protected by Interactive Brokers, who will return them to you. This information is also available on the Protections page.
Internal cash transfers between your ISAs are already possible. You can initiate a transfer at any time by going to Settings > Manage funds > Move funds. All such transfers are instantly reflected and free of charge. There’s no limit to how many times you can transfer between the two accounts, and internal transfers don’t impact your allowance in any way.
@Momchil.G Thank you for such a reassuring response!
I will sleep very well tonight
If say someone decided to withdraw their consent to QMMF then I understand they will not get any interest on the un-invested cash. But will this withdrawal of consent then cover the uninvested cash under FSCS?
I guess a perfect option for the risk averse to hedge their cash if they do not want to remain invested for a while (say going away on a long holiday) and do not want to risk QMMF for the period they are away from the platform!
If you hold only cash and we fail, your money is safe and sound at the banks we use to keep client money. If the banks where we hold your money fail and they are unable to return them, the FSCS can award up to ÂŁ85,000 in compensation per bank.
If you hold investments, such as shares and QMMFs, and we fail, they are still protected by Interactive Brokers, who’ll return them to you. If we have failed to keep your investments separate from our own, the FSCS can award up to £85,000 in compensation per person.
In both cases, the FSCS protection applies. Where it doesn’t apply is if QMMFs go down in value. I hope this answer fully clarifies everything
So given that you can easily and freely transfer cash back and forth from a T212 cash ISA to a T212 S&S ISA then what is the point in having Uninvested funds held in QMMFs when customers can simply keep their money in the T212 Cash isa which is protected by a bank and slightly safer?
This is the best explanation I have seen anywhere of how the risks to our uninvested cash are mitigated - this should be a template to reply with to anyone having this type of question. Well done @Momchil.G
The one question not answered is how Trading212 can make a sufficient return on funds held in a Cash ISA so as to be able to pay 5%+ interest if those funds are held in cash at third party banks.
for such a reassuring response!
