Majority of UK public unaware of investor safeguards – survey
Just 4% of respondents knew that the maximum level of compensation is £50,000 for clients of investment firms.
About two years have passed since the SNB decision on January 15, 2015 sent shock waves across the entire online trading industry, leading to the collapse of two investment firms in the UK – Alpari UK and LQD Markets UK. The events pushed numerous clients of the ill-fated brokerages to claim compensations for their deposits. Back then, the staff at the Financial Services Compensation Scheme (FSCS), the Financial Conduct Authority (FCA) and the special administrators appointed at the defunct companies had to explain to thousands of investors whether they are eligible for a compensation and, if so, what is the application procedure for getting any.
In the face of those events, today, the majority of UK public remains ignorant regarding its investor rights. This is exhibited by the results of a survey by consumers’ association Which?, whose findings were published earlier today.
The survey was conducted amid 1,692 people in November 2016 and found a lack of knowledge about investor safeguards in case the investment firm whose clients they are collapses.
The main findings:
- Only one in three (32%) respondents was aware that investments fall under the remit of the Financial Services Compensation Scheme (FSCS).
- Only 4% of people knew the maximum level of compensation is £50,000 if they are clients of an investment firm.
- Two-thirds (67%) of those surveyed realized that deposits with a bank or building society are protected.
As a result, Which? concludes that regulators and investment firms are not doing enough to inform investors of their rights, given that compensation rules for investments are more complicated than they are for bank deposits.
Which? provides a brief summary concerning the cover provided by the FSCS and the Financial Ombudsman Service. It also publishes a quiz so that each investor can test his/her knowledge of his rights to receive compensations.
On January 16, 2017, FSCS announced it would levy the UK financial services industry £378 million in 2017/18, with the sum dubbed to reflect the “costs of protecting people”.