Financial Services Compensation Scheme (Investments) – The FSCS provides protection or insurance cover on investments, (typically this will be collective investments). Unlike the protection for deposits which provides cover for £75,000, investment protection is limited to £50,000.
You should be aware however that in practice this form of protection is only really required in the event of fraud, dishonesty or negligence. As investments in unit trusts are held by independent custodians.
Investing with stock brokers may be riskier, as some investors discovered when entrusting WH Ireland with the life savings, as despite a request by the FSCS to compensate clients for more than the statutory minimum, WH Ireland failed to comply.
The FSCS does not however cover you for poor performance of investments, providing the choice of investment was deemed suitable.
It is therefore wise to make sure you understand the level of protection that you have and that you take sensible precautions.
If you look after your investments yourself then life is a bit simpler, as you only have yourself to blame.
When you are investing do not be persuaded to investment in anything sold over the telephone.
Do not invest (loan) any monies to friends.
Sit down quietly and work out exactly what you want from your investments, the level of income, the amount of risk, the accessibility of the funds – before you see an adviser.
Make sure you book an appointment with a professional adviser, an Independent Financial Adviser of many years standing, rather than be tempted to take advice from an employee of a bank or building society.
When you see an adviser, don’t allow the conversation to be solely about your investment monies – also ask for what other advice they provide as this may prove important to you and your family.