Majority of UK public unaware of investor safeguards – survey

Maria Nikolova

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”.

Read this next

Digital Assets

US wants Bittrex to settle federal dues before compensating customers

The U.S. government has raised objections to Bittrex’s proposal to compensate its customers, adding to concerns about the resolution of the crypto exchange’s bankruptcy case.

Digital Assets

Binance prepares to suspend US dollar funding after SEC crackdown

Binance.US said it will temporarily suspend US dollar deposits and provided customers with a deadline to withdraw their fiat balances. This decision comes after the US Securities and Exchange Commission (SEC) filed a lawsuit requesting the freezing of Binance’s assets in the country.

Digital Assets

Januar launches real-time payments network to fill gap made by Silvergate and Signature

“To all the entrepreneurs and innovators out there is a clear message: if you are a legitimate European business working with crypto then Januar is here to provide you with the account and payment infrastructure you need to operate successfully and build the financial system of tomorrow.”

Retail FX

Exness’ active clients top 515K as monthly volume hits $3.35 trillion

FX trading volumes are climbing again as economic uncertainty spurred by recent developments over central banks’ policies encouraged speculators to pile back into the market.


Danske Bank plans signficant investment in digital platforms

“We have decided to significantly increase our investments in our digital platforms, expert advisory services and sustainability, focusing on the areas where we see the best opportunities for profitable growth.”

Digital Assets

ERD DeFi Lending Platform and USDE Stablecoin Unveiled at EDCON 2023

ERD, the Ethereum Reserve Dollar, is a decentralized lending platform and stablecoin that aims to provide a capital-efficient, decentralized, and stable solution to the challenges faced by the stablecoin industry, introducing a minimum collateralization ratio of 110% and a robust liquidation mechanism.

Institutional FX

CMC Markets acquires 33% stake in UK blockchain firm StrikeX

“This is a major strategic investment in the growing Web 3.0 technology space of which StrikeX Technologies gives us access to the very best technology and advancements. StrikeX is a brilliant, young dynamic company, with a very talented team that has its finger on the pulse of fast moving technologies.”

Digital Assets

Archax utilizes Hedera Hashgraph DLT to tokenize interest in abrdn’s money market fund

“It is exciting to see a tangible application of Archax’s tokenization engine working with Hedera and it paves the way for us to look at creating other digital, blockchain-based token investment solutions.”

Institutional FX

Citi connects directly to Hong Kong’s central clearing and settlement system

“In 2020, we were the first sub-custodian in Hong Kong to offer our clients real-time notification of the trade matching status. The latest solution is a continuation of our efforts to provide a complete suite of services that are as close to real-time as possible.”