Investment Platforms: Are They Safe?

Investment platforms are a place to buy, sell and store your investments in one place, without having to worry about managing lots of pieces of paper and documentation. They can also lower your costs. But are they safe? Investment platforms should be registered with the Financial Conduct Authority (FCA) and your investments are ring-fenced from the rest of the platform. So, if the platform gets into financial trouble, your money will be safe and secure.

DIY investing platforms should be registered with the City watchdog, the Financial Conduct Authority (FCA)

It is important to know that the DIY investing platform you are trusting with your money is safe. DIY investing platforms offer a range of ways to invest your money and they have as much responsibility to protect you as banks or a financial adviser would.

Your investments are, in effect, ring-fenced from the rest of the platform. So if your platform fails into its own financial troubles, your money will be safe and secure. You are still responsible for investment decisions but with a ‘nominee’ account the platform will act on your behalf. A whole host of technology is in place to know what you’ve invested in, how much of it you’ve got and to help you make the transactions you want to make.

The closure of a platform is not as big a disaster as it sounds for investors. Your money on an authorised platform should be safe as it has been ring-fenced with a custodian in a nominee account. By investing online through a platform you can also substantially lower your costs. Platforms benefit from economies of scale and can often negotiate lower annual management charges on funds for investors.

Your investments are ring-fenced from the rest of the platform

Investment platforms are a place to buy, sell and store your investments in one place, without having to worry about managing lots of pieces of paper and documentation. They should be registered with the City watchdog, the Financial Conduct Authority (FCA). You can check this by searching the financial services register on the FCA website. If platforms aren't on the register, they aren't legitimate.

Your investments are, in effect, ring-fenced from the rest of the platform. So if your platform fails into its own financial troubles, your money will be safe and secure. You are still responsible for investment decisions but with a ‘nominee’ account the platform will act on your behalf. Mark Polson, of platform consultancy the lang cat, explains: 'This custodian is responsible for making sure that your assets are held securely and that they’re separate from the assets of the platform itself. A whole host of technology is in place to know what you’ve invested in, how much of it you’ve got and to help you make the transactions you want to make.'

The closure of a platform is not as big a disaster as it sounds for investors. Your money on an authorised platform should be safe as it has been ring-fenced with a custodian in a nominee account.

Platforms should have a custodian in a nominee account

Investment platforms should have a custodian in a nominee account. This means that your investments are ring-fenced from the rest of the platform. If the platform fails into its own financial troubles, your money will be safe and secure. The custodian is responsible for making sure that your assets are held securely and that they are separate from the assets of the platform itself.

Platforms should be registered with the FCA (Financial Conduct Authority). You can check this by searching the financial services register on the FCA website. This will tell you the names of the individuals involved, any disciplinary history and provide contact details. If platforms aren't on the register, they aren't legitimate.

Platforms should be authorised

Platforms should also be ring-fenced with a custodian in a nominee account. This means that your investments are separate from the rest of the platform. So if the platform fails into its own financial troubles, your money will be safe and secure.

Platforms should also have a whole host of technology in place to know what you've invested in, how much of it you've got and to help you make the transactions you want to make. This technology should be secure and protect your personal information.

Platforms should also be transparent about their fees and charges. They should also be able to negotiate lower annual management charges on funds for investors.

Platforms should be able to hold client money

Investment platforms should be able to hold client money. All platforms should be registered with the FCA (Financial Conduct Authority) and you can check this by searching the financial services register on the FCA website. This will tell you the names of the individuals involved, any disciplinary history and provide contact details. If platforms aren't on the register, they aren't legitimate.

Platforms should be somewhere to buy, sell and store your investments in one place, without having to worry about managing lots of pieces of paper and documentation. Your investments are, in effect, ring-fenced from the rest of the platform. So if your platform fails into its own financial troubles, your money will be safe and secure. You are still responsible for investment decisions but with a ‘nominee’ account the platform will act on your behalf.

Mark Polson, of platform consultancy the lang cat, explains: 'This custodian is responsible for making sure that your assets are held securely and that they’re separate from the assets of the platform itself. 'A whole host of technology is in place to know what you’ve invested in, how much of it you’ve got and to help you make the transactions you want to make.

Frequently asked questions