Nominee accounts are accounts set up by advisers for the purpose of administering assets held on behalf of their clients. There is no requirement for these nominee companies to be authorised under the Financial Services Act so strictly speaking funds held in nominee accounts would not be covered by the Investors Compensation Scheme ICS .
In practice however the investment adviser would almost certainly be responsible. If you are considering investing with an investment adviser who intends to hold investments like shares for you in a nominee account you should find out
In short if the investment adviser takes responsibility for the nominee account check the wording of the documentation the Investors Compensation scheme will cover you.
Many private investors have been setting up nominee accounts with stockbrokers following the introduction of the Crest system for share settlement. If you're in this position you need to be sure that by transferring your shares into a nominee account youll still be receiving the sort of service you expect.
Proshare the private investors pressure group has produced guidelines of best practice which itd like to see stockbrokers adopting. For example does your broker ensure that your voting rights and perks are safeguarded Do you receive dividends promply and are you receiving Reports & Accounts for the companies your invest in
Moneyextra.com recommends you take independent financial advice before acting on any articleBack
2009-02-17 00:00:00 © Moneyextra.com