FSCS on Investments


I was looking at the vanguard life strategy - but your faq implies no FSCS protection?

If you go direct via vanguard, I understand you get this?

So I’m wondering what the incentive is to do it in house!


In terms of investments, FSCS is less relevant, but not completely irrelevant.

When your cash is invested in funds like the Vanguard LS, you do not have FSCS protection on that. You’ll get nothing back if the fund value goes to zero. If the investment platform (such as Dozens) went bankrupt but the investment products are still trading, you are still legally the owner of the investment products you’ve bought on the platform. When this happens, you won’t be able to sell the funds immediately, and you may be charged some fees to cover the cost of transferring your investment to somewhere else. Since you didn’t lose your investments, FSCS protection is not involved in this case.

So, when is the FSCS protection relevant? It’s only relevant when you are holding cash, not investments, on an investment platform. Since investment platforms don’t pay competitive interest rate on cash holdings (if they pay any at all), it doesn’t make sense for anyone to hold large amount of cash for a long period of time. You should only worry about FSCS protection if you are planning to hold a lots of cash.


Thank you very much for this response. It’s quite illuminating.

So in essence - the protection only applies to your cash on the platform pre or post being in the market and/or any cash held in an investment portfolio?

Regarding the transfer - I understand Dozens have a bespoke wind down approach to cater to this? Possibly allowing selling and transferring out as a better option.

How about if Vanguard had issues with their own products technically or financially (aka not the value) would I be any further behind in the pecking order?

Yes. Just want to add that cash may also come from other sources, such as share buy backs and interest and dividend from bonds, stocks and funds. But those tend do be much smaller amount relative to the size of your portfolio, so they are rarely a problem either.

In the event that the investment platform defaults, they must cease process all transaction immediately, this is to protect the interest of their creditors. Therefore, selling won’t be an option when a platform has failed.

There’s a few protections, but don’t bank on them.

  • FCA may (partially) reimburse the investors if a regulated financial institution committed a fraud.
  • the fund manager’s business insurance may pay out if there’s an operational or technical error
  • investors may get nothing back if it was purely bad investment decision made by the fund manager in an active fund. For example, the Woodford fund.

Just on this point - if I were to invest in a Vanguard LS product via Dozens - with whom would such cash as a proportion of the investment sit - Dozens or Vanguard?

Thanks for raising this @Rexx and we’re in the process of updating this FAQ from this conversation.

As I’m sure you know, any cash that we hold on your behalf is kept in a segregated client bank account that has FSCS protection. Any Bonds, ETFs and funds are held in segregated client account, at a custodian bank. If Dozens were to go in to administration, our creditors have no claim to assets in segregated client accounts. Your cash and investments would be returned to you.

As with all investments, your capital is at risk, which means you could lose all the money you’ve invested.

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The cash proportion of your investment (comprised of residual cash and funds held for fees) would sit in our segregated account with TPS (Third Platform Services), our custodian account.

TPS provides clearing and settlement, safe custody and associated services - which allows them to hold or transfer cash and investments on your behalf.

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Thanks for responding! So is the residual cash relevant to these investments covered by FSCS?

You referenced TPS but I understand this money is held in an E-money protection style as opposed to FSCS.

I know it isn’t major - but if I invest a reasonable sum a decent amount will be set aside in cash

I just want to make sure that I get this correct for you @Rexx , let me check and i’ll get back to you ASAP

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The beauty of having funds shored up by ClearBank at the Bank of England :ok_hand:

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@Rexx sorry for the wait. I can confirm that residual cash, relevant to your investments is covered by FSCS.

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Good to hear - I think the faq update will be good as you may as well sell the reassurance whilst still indicating capital is at risk :slight_smile:

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Not sure this ever was updated?

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Thanks @Rexx :slight_smile: