Question
How safe is an ISA investment with Cavendish Online (i.e. what would happen if Cavendish Online were to go bankrupt?).Answer
Cavendish Online doesn't hold your money or investments, it simply acts as a broker to collect sales commissions and pass them onto you. So, if they were to go bust, your ISA investments would be unaffected.
I suppose you could theoretically lose any trail commission refund that Cavendish was holding for you at the time of going bust, but this would be the extent of your exposure.
You would have the inconvenience of having to appoint another discount broker as 'agent' for your ISA(s), so that you could continue receiving commission rebates. And at present the other brokers out there aren't as generous as Cavendish, so the rebates would likely be lower.
What happens if the fund supermarket (e.g. FundsNetwork) goes bust? Provided they haven't illegally dipped their fingers into your investments, then again your ISA would be safe. This is because the funds within your ISA are ring-fenced by a 'custodian' (usually a third party bank) from both the fund manager and fund supermarket, meaning it's held separately from their businesses.
If something illegal does happen, the Financial Services Compensation Scheme (FSCS) currently provides cover of £50,000 for the fund supermarket and £50,000 per underlying fund management company. More details in my answer to this question.
All in all, there's very little to worry about, but if you want to ere on the side of caution then restrict your fund investments to £50,000 per fund group and use a well established fund supermarket/platform.
How safe is an ISA investment with Cavendish Online (i.e. what would happen if Cavendish Online were to go bankrupt?).Answer
Cavendish Online doesn't hold your money or investments, it simply acts as a broker to collect sales commissions and pass them onto you. So, if they were to go bust, your ISA investments would be unaffected.
I suppose you could theoretically lose any trail commission refund that Cavendish was holding for you at the time of going bust, but this would be the extent of your exposure.
You would have the inconvenience of having to appoint another discount broker as 'agent' for your ISA(s), so that you could continue receiving commission rebates. And at present the other brokers out there aren't as generous as Cavendish, so the rebates would likely be lower.
What happens if the fund supermarket (e.g. FundsNetwork) goes bust? Provided they haven't illegally dipped their fingers into your investments, then again your ISA would be safe. This is because the funds within your ISA are ring-fenced by a 'custodian' (usually a third party bank) from both the fund manager and fund supermarket, meaning it's held separately from their businesses.
If something illegal does happen, the Financial Services Compensation Scheme (FSCS) currently provides cover of £50,000 for the fund supermarket and £50,000 per underlying fund management company. More details in my answer to this question.
All in all, there's very little to worry about, but if you want to ere on the side of caution then restrict your fund investments to £50,000 per fund group and use a well established fund supermarket/platform.
Read this Q and A at http://www.candidmoney.com/questions/question585.aspx
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