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

CME Group to launch reference rates and indices on Avalanche (AVAX), Filecoin (FIL), and Tezos (XTZ)

Several leading crypto exchanges and trading platforms will provide pricing data for these new benchmarks, starting initially with Bitstamp, Coinbase, Gemini, itBit, Kraken, and LMAX Digital.

Technology

OneConnect launches operation in ADGM further expanding in Middle East

OneConnect has launched its regional operations in Abu Dhabi Global Market (ADGM), the leading international financial centre of the capital of the UAE, after having worked together on the creation of the ADGM Digital Lab which was launched in April 2021. The ADGM Digital Lab is a marketplace and industry sandbox to encourage the development […]

Industry News

Bitso powers crypto into Via’s payroll platform as remote work triples by 2027

“We are also allowing companies to hire international talent without worrying about administrative issues.”

Retail FX

Vantage partners with FinaCom for external dispute resolution and up to €20,000 protection per client

Vantage has joined the Financial Commission (FinaCom) as a member, thus gaining access to the external dispute resolution body’s range of services and membership benefits, including the unbiased resolution process facilitated by FinaCom, and the protection of up to €20,000 per client, covered by the FinaCom’s compensation fund.

Digital Assets

LMAX Digital onboards Bryan Christian and Cassandra Cox to lead sales

Institutional cryptocurrency exchange LMAX Digital continues to undergo a series of changes in its top ranks as it continues to build its presence globally. Two industry veterans, Bryan Christian and Cassandra Cox, have joined the group as its newest sales directors in Europe and USA.

Digital Assets

Cake DeFi introduces Ethereum Staking with 5% returns

Cake DeFi, a Singapore-based DeFi platform, is launching its Ethereum (ETH) staking service for retail and institutional customers.

Retail FX

FX trading rebounds 405pct at Saxo Bank in September

In a volatile market driven by Russia-Ukraine headlines, FX trading volumes through Saxo Bank have rebounded strongly in September to the highest level in three months.

Retail FX

CMC Markets’ stock climbs as H1 revenue to climb +20%

CMC Markets PLC (LSE:CMCX) shares spiked 5.6 percent to 235p in Thursday’s trading after the firm’s trading update for the first half of its fiscal year 2023 revealed results at the high end of company projections.

Retail FX

Interactive Brokers doubles client accounts to 2 million in 24 months

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes took a slight step back in September, an indication that investor confidence is still fairly mixed over the past few months.

<