Why bother with an ISA when your tax free limit on interest if now £1k?
Even if you can find an Account that pays 2% interest, you'd need £50k in it before you need to pay tax on the interest.
That's a good point, but I was planning that we would open a Stocks and Shares ISA for it. Maybe we might just open an account directly with a fund manager like Vanguard.
In which case the whole ISA thing is bloody stupid.
Right, someone please tell me why the following isn't a complete load of bollocks.
My niece is starting Uni. As with her brother I am helping with the financing of the horrendous costs. So i thought I the best way would be to open an ISA for her which I, my sister, and my Mum, can pay into, and I would manage the investments. I chose Charles Stanley, and of course it was clear that she must open it in her own name, and they said of course at her discretion she can give me the login details. But when I tried to pay in a first instalment of money, I found I could not. A very fierce statement said that no money can be received from any account no belonging to the holder. When I asked them why not, they said....
Money laundering regulations....
What the actual? Am i seriously to believe there is a danger that a corrupt Central Asian politician is going to try and launder his ill gotten billions by opening a million ISA's???? An ISA is one of the most closely monitored accounts by HMRC - they claim - because of the tax limits.
Someone please explain the serious threat here.
I think that was just a poor excuse.
The truth of the matter is that the Individual Savings Account Regulations clearly state that the "account investments must be in the beneficial ownership of the account holder".
The ISA manager clearly would not want the onerous task of checking who the beneficial owner actually was. The simple way of doing that is to set up their systems to only accept funds electronically from the account holder.
Wnen these regs were written, times were very different. Cash accounts actually paid some worthwhile interest! Who knows, someday, they might again. The regs were written I'd have thought to stop people avoiding tax by spreading their money around various relatives.
But guess that doesn't work if she is older? I'm no expert on them but assume she is taking a student loan? I've heard Martyn Lewis say it is a big mistake all round not to do so.
But guess that doesn't work if she is older? I'm no expert on them but assume she is taking a student loan? I've heard Martyn Lewis say it is a big mistake all round not to do so.
Yes she is taking out a student loan, but will have to pay it back, of course. It would be nice to help reduce that burden. Especially as she has to pay three times as much as her elder brother (whom I also supported).
Does anybody seriously think this money-laundering excuse holds water?
The same excuse is used by HSBC to dictate that I cannot transfer more than 10k per day in total from my internet banking, but if I use my debit card to transfer money form the same account, that is OK....Meanwhile how are we getting on with halting the industrial scale money laundering that is going on in the City and the property market? Nothing? Thought not.
I think there is a risk there for the ISA manager under the know your client regime.
You could have crims approaching people and binging them £500 to get them to set up an ISA where they then chucked in dodgy cash.
However, if they were to do more checks they should get comfortable that isn't the case.
I guess they also think that you could transfer the money to an account of the ISA holder and they could make the transfer into the ISA.
Why don't you try your niece having a dedicated account for the ISA payments where the money goes out by standing order as soon as the money comes in from you?
I think there is a risk there for the ISA manager under the know your client regime.
You could have crims approaching people and binging them £500 to get them to set up an ISA where they then chucked in dodgy cash
However, if they were to do more checks they should get comfortable that isn't the case.
I guess they also think that you could transfer the money to an account of the ISA holder and they could make the transfer into the ISA.
Why don't you try your niece having a dedicated account for the ISA payments where the money goes out by standing order as soon as the money comes in from you?
Why on earth would "crims" do that? For what gain? Especially if the crim plans to set up a standing order from his own account, for all plod to study at leisure. Come on. Nonsense on stilts.
I suppose the resolution is in your last sentence, but bloody hell, how complicated, and I wonder whether it is worth it.
Do you think it is just Charles Stanley applying this limitation, or is it likely to be a universal application? And who is responsible for coming up with this nonsense?
Funnily Major Oromo of the Nigerian royal family has recently asked me to open an ISA for his 38 grandchildren. If I pop £15740 in each one he is going to send me £8 million. Bloody nice bloke eh !
Funnily Major Oromo of the Nigerian royal family has recently asked me to open an ISA for his 38 grandchildren. If I pop £15740 in each one he is going to send me £8 million. Bloody nice bloke eh !
Always has been the situation, ever since ISA (and before that, PEP;'s) came into force - investments must be funded by an account bearing the applicants name. It cane be from a joint account BUT it must contain the applicants name.
Pain in the arse as many a money earning client has been willing to fund his/her spouse's ISA and hasn't been able to do so.......... (yes, there are still men/women out there without a bank account in their name)
I am still trying to puzzle out this alleged anti -money laundering stuff. So perhaps one of you money -launderers out there can give me an insight into how you do it.
Let's suppose that I, my mum, and my sister are all laundering money. We decide the best way to do this is to open an ISA account for my niece at Charles Stanley, and pay our laundered money into it. Of course only up to her annual £15k allowance, so we won't get rid of much of our millions.
But the diligent and compliant Charles Stanley say "oh, no, you can't do that"
So instead we go down the route @Alwaysneil suggested. We open a current account for my niece at HSBC, transfer our laundered money in by standing order, and it immediately flows into the Charles Stanley account by matching standing order.
I mean, am I being thick here? What is the difference between an HSBC current account and one of these Charles Stanley accounts? The money trail is surely equally visible in both cases?
Charles Stanley will still do a Money Laundering exercise on the account, whether the money comes in as a lump sum or as a regular payment. Also as previously mentioned, an ISA is different to a bank/building society account and can only be in an individuals name (the I in ISA standing for INDIVIDUAL) - an ISA cant be in joint or multiple names and MUST come from an account bearing the applicants name.
Charles Stanley will still do a Money Laundering exercise on the account, whether the money comes in as a lump sum or as a regular payment. Also as previously mentioned, an ISA is different to a bank/building society account and can only be in an individuals name (the I in ISA standing for INDIVIDUAL) - an ISA cant be in joint or multiple names and MUST come from an account bearing the applicants name.
Well, Golfie and others, it turns out that this 'money laundering' bollocks is nothing to do with an ISA, per se. The guy from Charles Stanley has explained that "The conditions for paying money into accounts with us are the same across all account types, not just ISAs.".
Why are these conditions not applied to bank current accounts? "Banks are also regulated the FCA but there is not necessarily equivalence between the operational standards they need to meet and those of differing types of financial services firms. Different types of business have different requirements, so what is prescribed as good practice under regulations for a large banking institution is not necessarily the same as it would be for a small investment firm." So that's alright then. We can all trust the big banks like HSBC not to be involved in money laundering, can't we?
Charles Stanley will still do a Money Laundering exercise on the account, whether the money comes in as a lump sum or as a regular payment. Also as previously mentioned, an ISA is different to a bank/building society account and can only be in an individuals name (the I in ISA standing for INDIVIDUAL) - an ISA cant be in joint or multiple names and MUST come from an account bearing the applicants name.
Well, Golfie and others, it turns out that this 'money laundering' bollocks is nothing to do with an ISA, per se. The guy from Charles Stanley has explained that "The conditions for paying money into accounts with us are the same across all account types, not just ISAs.".
Why are these conditions not applied to bank current accounts? "Banks are also regulated the FCA but there is not necessarily equivalence between the operational standards they need to meet and those of differing types of financial services firms. Different types of business have different requirements, so what is prescribed as good practice under regulations for a large banking institution is not necessarily the same as it would be for a small investment firm." So that's alright then. We can all trust the big banks like HSBC not to be involved in money laundering, can't we?
What a load of bollocks.
As I said earlier, (while I haven't and am not going tt read their T&Cs) I still think you (and maybe they) are confusing what is required because of the money laundering regs and what is required by this firm of brokers because it is a pragmatic way of dealing with client money and will save them from potentially onerous administration. (The regs on ISAs are a different thing altogether but they have said it applies to all their relationships, so I'm ignoring that.)
My guess is that their T&Cs will say something like "you, as client must be the beneficial owner of the assets held by us on your behalf". The primary reason for this is because they do not want to get into any disputes with third parties. For example, the T&Cs would, therefore preclude a client, without breaking the T&Cs, from putting the client's dematerialised CREST held shareholdings up as security for a loan the client might have taken out and upon which the client might later default.
This is all to do with an easy life for the broker rather than money laundering regs, surely?
Banks are a different proposition all together. Of course, for example, Charlton Athletic's bankers are going to permit third party money to be paid into the account. It would be all that lovely season ticket income. Similarly, Ms Miere's bank won't mind at all if Mr D pays in a regular monthly amount by way of salary. The thing is, that any amount over £10k is subject to a suspicious activity report (SAR) if there is no rational and plausible explanation for the payment. Now, clearly certain payments to certain individuals for film royalties, for example, are very much larger than this (and could of themselves trigger plausibility checks in changes to a bank's statistical returns). But they will have a reasonable explanation so a SAR won't be needed.
But, clearly, your broker doesn't want to put themselves through this kind of crap if they can set themselves up to avoid as much of the processes as possible. But they are not being made to do it by the money laundering checks. It is their choice. It makes sense in the context of their work. They should be looking after money which belongs to the client.
My SIPP was previously funded from contributions from my UK company which latterly mainly existed to keep making such contributions. I had to close it down because it wasn't economic to keep it going. I can still make personal contributions to the SIPP of £3600 a year, but in my case as a tax non-resident, such a contribution isn't tax deductible. I do pay income tax, but the wrong type apparently (rental income). Has to be employment income.
Anyway, my question is if I cannot make the SIPP contribution tax deductible is there any point in putting money there, rather than investing it directly in funds or whatever (I would probably be choosing the same funds)? I can't think of any advantage, but maybe I have missed something?
Just catching up with Cl and I couldn't resist the opportunity to rubbish SIPPs.
I'm waiting for the ambulance chasers to latch on to the mis selling of SIPPs for people who end up investing in funds they could get access to at a fraction of the charges by taking out an ordinary personal pension.
Unless you're invested directly in a company's shares or have bought a commercial property or such like, there's nothing a SIPP offers you couldn't get a lot cheaper.
SIPPS were a marketing invention of the insurance companies that replaced the old Self Administered Pension Schemes. SASSs were the preserve of business owners who avoided tax by shovelling profits into a scheme that bought a yacht, a villa or their business premises. The pension fund could even make a loan back at minimal interest rates. It allowed wealthy investors to retain control of an asset they already owned, or wanted to own, by using tax exempt profits and avoiding capital gains tax. Some money went to traditional insurance funds, no different to a personal pension fund, and when SASS's were effectively strangled by HMRC, only conventional investments were available and insurance companies saw the opportunity to enter the market.
The idea that a SIPP, as the replacement for the SASS is the sexy and smart way to invest for a pension is the selling point. The sexy stuff on offer is just window dressing, most people want some security and very few people are dumb enough to take the risks that a SIPP allows them to take. The risks only ever made sense if there was a fruity tax break. Paying a few £thousand a year for a SASS and a fund of several million was worth it. Paying a few £hundred on a fund of several thousand is a rip off.
To maintain the illusion of exclusivity of a SIPP, companies for no good reason might restrict access to certain funds except via a SIPP. So you are sold a SIPP on the basis that it makes you are a smart investor because you have more "freedom". Yes freedom to pay through the nose for bog standard investment funds and be taken for a mug.
The same tactic was used to promote personal pensions instead of cheaper Stakeholder schemes by restricting what you could access via Stakeholder at a capped charge of 1.5% to ensure you bought the "regular" pension stuff for which you were charged 5%. Advisers were free to advise against Stakeholder schemes because there wasn't enough "freedom" so Stakeholder was confined to history as a failure. The industry would like everyone to buy SIPPS instead of the cheaper products and the marketing is aimed that way at anyone with more than a few quid to invest.
My SIPP was previously funded from contributions from my UK company which latterly mainly existed to keep making such contributions. I had to close it down because it wasn't economic to keep it going. I can still make personal contributions to the SIPP of £3600 a year, but in my case as a tax non-resident, such a contribution isn't tax deductible. I do pay income tax, but the wrong type apparently (rental income). Has to be employment income.
Anyway, my question is if I cannot make the SIPP contribution tax deductible is there any point in putting money there, rather than investing it directly in funds or whatever (I would probably be choosing the same funds)? I can't think of any advantage, but maybe I have missed something?
Just catching up with Cl and I couldn't resist the opportunity to rubbish SIPPs.
I'm waiting for the ambulance chasers to latch on to the mis selling of SIPPs for people who end up investing in funds they could get access to at a fraction of the charges by taking out an ordinary personal pension.
Unless you're invested directly in a company's shares or have bought a commercial property or such like, there's nothing a SIPP offers you couldn't get a lot cheaper.
SIPPS were a marketing invention of the insurance companies that replaced the old Self Administered Pension Schemes. SASSs were the preserve of business owners who avoided tax by shovelling profits into a scheme that bought a yacht, a villa or their business premises. The pension fund could even make a loan back at minimal interest rates. It allowed wealthy investors to retain control of an asset they already owned, or wanted to own, by using tax exempt profits and avoiding capital gains tax. Some money went to traditional insurance funds, no different to a personal pension fund, and when SASS's were effectively strangled by HMRC, only conventional investments were available and insurance companies saw the opportunity to enter the market.
The idea that a SIPP, as the replacement for the SASS is the sexy and smart way to invest for a pension is the selling point. The sexy stuff on offer is just window dressing, most people want some security and very few people are dumb enough to take the risks that a SIPP allows them to take. The risks only ever made sense if there was a fruity tax break. Paying a few £thousand a year for a SASS and a fund of several million was worth it. Paying a few £hundred on a fund of several thousand is a rip off.
To maintain the illusion of exclusivity of a SIPP, companies for no good reason might restrict access to certain funds except via a SIPP. So you are sold a SIPP on the basis that it makes you are a smart investor because you have more "freedom". Yes freedom to pay through the nose for bog standard investment funds and be taken for a mug.
The same tactic was used to promote personal pensions instead of cheaper Stakeholder schemes by restricting what you could access via Stakeholder at a capped charge of 1.5% to ensure you bought the "regular" pension stuff for which you were charged 5%. Advisers were free to advise against Stakeholder schemes because there wasn't enough "freedom" so Stakeholder was confined to history as a failure. The industry would like everyone to buy SIPPS instead of the cheaper products and the marketing is aimed that way at anyone with more than a few quid to invest.
Or they allow you to make your own investment choices. I work in the industry and will build my own portfolio exactly how I want it to be comprised, I couldn't do that without a SIPP
My SIPP was previously funded from contributions from my UK company which latterly mainly existed to keep making such contributions. I had to close it down because it wasn't economic to keep it going. I can still make personal contributions to the SIPP of £3600 a year, but in my case as a tax non-resident, such a contribution isn't tax deductible. I do pay income tax, but the wrong type apparently (rental income). Has to be employment income.
Anyway, my question is if I cannot make the SIPP contribution tax deductible is there any point in putting money there, rather than investing it directly in funds or whatever (I would probably be choosing the same funds)? I can't think of any advantage, but maybe I have missed something?
Just catching up with Cl and I couldn't resist the opportunity to rubbish SIPPs.
I'm waiting for the ambulance chasers to latch on to the mis selling of SIPPs for people who end up investing in funds they could get access to at a fraction of the charges by taking out an ordinary personal pension.
Unless you're invested directly in a company's shares or have bought a commercial property or such like, there's nothing a SIPP offers you couldn't get a lot cheaper.
SIPPS were a marketing invention of the insurance companies that replaced the old Self Administered Pension Schemes. SASSs were the preserve of business owners who avoided tax by shovelling profits into a scheme that bought a yacht, a villa or their business premises. The pension fund could even make a loan back at minimal interest rates. It allowed wealthy investors to retain control of an asset they already owned, or wanted to own, by using tax exempt profits and avoiding capital gains tax. Some money went to traditional insurance funds, no different to a personal pension fund, and when SASS's were effectively strangled by HMRC, only conventional investments were available and insurance companies saw the opportunity to enter the market.
The idea that a SIPP, as the replacement for the SASS is the sexy and smart way to invest for a pension is the selling point. The sexy stuff on offer is just window dressing, most people want some security and very few people are dumb enough to take the risks that a SIPP allows them to take. The risks only ever made sense if there was a fruity tax break. Paying a few £thousand a year for a SASS and a fund of several million was worth it. Paying a few £hundred on a fund of several thousand is a rip off.
To maintain the illusion of exclusivity of a SIPP, companies for no good reason might restrict access to certain funds except via a SIPP. So you are sold a SIPP on the basis that it makes you are a smart investor because you have more "freedom". Yes freedom to pay through the nose for bog standard investment funds and be taken for a mug.
The same tactic was used to promote personal pensions instead of cheaper Stakeholder schemes by restricting what you could access via Stakeholder at a capped charge of 1.5% to ensure you bought the "regular" pension stuff for which you were charged 5%. Advisers were free to advise against Stakeholder schemes because there wasn't enough "freedom" so Stakeholder was confined to history as a failure. The industry would like everyone to buy SIPPS instead of the cheaper products and the marketing is aimed that way at anyone with more than a few quid to invest.
Or they allow you to make your own investment choices. I work in the industry and will build my own portfolio exactly how I want it to be comprised, I couldn't do that without a SIPP
Only someone in the industry would call a personal pension policy with a few different manager funds a "portfolio". Adviser speak to make it seem something special. Marketing bullshit o perpetuate the illusion you are following in the footsteps of the gentry who used to hold their cash in a portfolio of individual stocks and shares managed by their stockbroker. If you can only get what you want with a SIPP it's because that's the way the industry wants it, not for any other reason.
Whatever way you want your fund "comprised" you can do it without a SIPP if you know what you are doing. Most people don't have the inclination or knowledge to make up their own "portfolio" and all the evidence ever produced proves that moving money around chasing manager performance delivers less than the market.
A "portfolio" should be based firstly on asset class choice, not manager. The choice of manager is only relevant if you are wanting out-performance of your asset class against it's benchmark, otherwise you choose a tracker and select the manager showing lowest fees and tracking error.
You do not need a SIPP to achieve a sensible risk based range of investments. You need a SIPP to allow people to think they are doing something clever and provide space for IFAs to give the impression they can add value and justify fees.
But what does an "ordinary personal pension" look like? From where and how do you open and manage one? They seem to be invisible.
Any of the big insurers have a range of funds available. At random I just googled Flexible Personal Pension and the Aegon page came up. Looks like an example of a policy with access to their whole range of funds. I imagine most of the providers have something similar, but that's what IFAs would know if you asked.
Insurers only manage a limited range of funds themselves, the rest is outsourced to managers they select on merit. So there are many providers and thousands of different funds available from seemingly different managers but in fact the same relatively small pool of delegated specialist managers are used by all of the providers to deliver the goods. The only difference is brand and price.
Anyone employed has or will have will have access to an employer's Auto Enrolment scheme. That scheme must have an "adequate" range of fund options to meet regulatory guidelines. Some schemes give full access to the providers funds which can easily run to a few hundred, sufficient for most needs, but obviously not enough for those who know a manager guaranteed to beat them all and only available through a SIPP.
Unless it was set up by an IFA in cahoots with the employer to extract maximum commission rates on your contributions to rebate to the employer, the AE scheme will give you access to lower cost funds than you could access yourself privately and ought to be the first port of call.
I mailed the FCA about Charles Stanley citing their rules as a reason not to allow third parties to pay into an ISA account. I must say that their response was first class. Fast, (the reply was sent on Saturday morning too), in plain, clear language, with practical advice. Here are the key extracts
"We don’t specifically state that individuals can’t pay into accounts which aren’t theirs. It may be that Charles Stanley have interpreted our rules and from their interpretation, they’ve deemed that they can’t allow outside deposits from non-account holders. I would suggest that you contact Charles Stanley and ask them which one of our regulations they believe doesn’t allow for outside deposits. All of our rules are publically available and they should be able to refer to whichever rule they’re relying on or explain if they have certain interpretation of a rule of ours. "
I must say that at first glance I like the look of it. However they themselves emphasise that it is a real long term investment. In most cases it seems that you would be locking away your capital for a minimum of 15 years.
The people behind it seem respectable though, and with the right kind of experience. One of them was involved in starting Zopa, it seems.
I mailed the FCA about Charles Stanley citing their rules as a reason not to allow third parties to pay into an ISA account. I must say that their response was first class. Fast, (the reply was sent on Saturday morning too), in plain, clear language, with practical advice. Here are the key extracts
"We don’t specifically state that individuals can’t pay into accounts which aren’t theirs. It may be that Charles Stanley have interpreted our rules and from their interpretation, they’ve deemed that they can’t allow outside deposits from non-account holders. I would suggest that you contact Charles Stanley and ask them which one of our regulations they believe doesn’t allow for outside deposits. All of our rules are publically available and they should be able to refer to whichever rule they’re relying on or explain if they have certain interpretation of a rule of ours. "
So I have just done exactly as they suggested.
Well, keep us posted. It seems it may well be Charles Stanley trying to take the easy option and blaming the Regs. Interesting, too, about the prompt response from the FCA. I can't imagine who was working the weekend!
Your energy scheme seems clean (excuse the pun). It's an FCA authorised firm and the compensation schemes apply. (But do not apply to an unlucky investment choice, of course, merely if there has been some form of wrongdoing.) The likely snag, it seems to me is that you hold a debenture, a loan note, a bond, call it what you will. I doubt that there would be any requirement upon the arranger to buy it back in the event you should want out. It is also, it seems, not an instrument that will be traded on a recognised exchange. So, to sell would mean finding a matched trade somehow.
For me, personally, it would be a no. I've had my wallet burned by venture capital investing before, I don't intend to do it again. I don't like the illiquidity and I don't like the (very) long-term nature of the investment. I'll more than likely be dead in 15-20 years and how would the executor get the money back?
just won another £100 in October's Premium Bond draw. How did you do Prague?
Dunno yet. Did you find out on the web? I am still not registered for the web, as I had to wait to pick up my login details which of course have to be sent by post; I suppose, as part of the War on Money Launderers.
just won another £100 in October's Premium Bond draw. How did you do Prague?
Dunno yet. Did you find out on the web? I am still not registered for the web, as I had to wait to pick up my login details which of course have to be sent by post; I suppose, as part of the War on Money Launderers.
Comments
Even if you can find an Account that pays 2% interest, you'd need £50k in it before you need to pay tax on the interest.
In which case the whole ISA thing is bloody stupid.
Have I missed something, though?
The truth of the matter is that the Individual Savings Account Regulations clearly state that the "account investments must be in the beneficial ownership of the account holder".
The ISA manager clearly would not want the onerous task of checking who the beneficial owner actually was. The simple way of doing that is to set up their systems to only accept funds electronically from the account holder.
Wnen these regs were written, times were very different. Cash accounts actually paid some worthwhile interest! Who knows, someday, they might again. The regs were written I'd have thought to stop people avoiding tax by spreading their money around various relatives.
scottishfriendly.co.uk/isas/junior-isa/who-can-pay-into-a-junior-isa
But guess that doesn't work if she is older? I'm no expert on them but assume she is taking a student loan? I've heard Martyn Lewis say it is a big mistake all round not to do so.
Does anybody seriously think this money-laundering excuse holds water?
The same excuse is used by HSBC to dictate that I cannot transfer more than 10k per day in total from my internet banking, but if I use my debit card to transfer money form the same account, that is OK....Meanwhile how are we getting on with halting the industrial scale money laundering that is going on in the City and the property market? Nothing? Thought not.
Nonsense on stilts (©, Sir John Major) surely?
You could have crims approaching people and binging them £500 to get them to set up an ISA where they then chucked in dodgy cash.
However, if they were to do more checks they should get comfortable that isn't the case.
I guess they also think that you could transfer the money to an account of the ISA holder and they could make the transfer into the ISA.
Why don't you try your niece having a dedicated account for the ISA payments where the money goes out by standing order as soon as the money comes in from you?
I suppose the resolution is in your last sentence, but bloody hell, how complicated, and I wonder whether it is worth it.
Do you think it is just Charles Stanley applying this limitation, or is it likely to be a universal application? And who is responsible for coming up with this nonsense?
Pain in the arse as many a money earning client has been willing to fund his/her spouse's ISA and hasn't been able to do so.......... (yes, there are still men/women out there without a bank account in their name)
Let's suppose that I, my mum, and my sister are all laundering money. We decide the best way to do this is to open an ISA account for my niece at Charles Stanley, and pay our laundered money into it. Of course only up to her annual £15k allowance, so we won't get rid of much of our millions.
But the diligent and compliant Charles Stanley say "oh, no, you can't do that"
So instead we go down the route @Alwaysneil suggested. We open a current account for my niece at HSBC, transfer our laundered money in by standing order, and it immediately flows into the Charles Stanley account by matching standing order.
I mean, am I being thick here? What is the difference between an HSBC current account and one of these Charles Stanley accounts? The money trail is surely equally visible in both cases?
Why are these conditions not applied to bank current accounts? "Banks are also regulated the FCA but there is not necessarily equivalence between the operational standards they need to meet and those of differing types of financial services firms. Different types of business have different requirements, so what is prescribed as good practice under regulations for a large banking institution is not necessarily the same as it would be for a small investment firm." So that's alright then. We can all trust the big banks like HSBC not to be involved in money laundering, can't we?
What a load of bollocks.
My guess is that their T&Cs will say something like "you, as client must be the beneficial owner of the assets held by us on your behalf". The primary reason for this is because they do not want to get into any disputes with third parties. For example, the T&Cs would, therefore preclude a client, without breaking the T&Cs, from putting the client's dematerialised CREST held shareholdings up as security for a loan the client might have taken out and upon which the client might later default.
This is all to do with an easy life for the broker rather than money laundering regs, surely?
Banks are a different proposition all together. Of course, for example, Charlton Athletic's bankers are going to permit third party money to be paid into the account. It would be all that lovely season ticket income. Similarly, Ms Miere's bank won't mind at all if Mr D pays in a regular monthly amount by way of salary. The thing is, that any amount over £10k is subject to a suspicious activity report (SAR) if there is no rational and plausible explanation for the payment. Now, clearly certain payments to certain individuals for film royalties, for example, are very much larger than this (and could of themselves trigger plausibility checks in changes to a bank's statistical returns). But they will have a reasonable explanation so a SAR won't be needed.
But, clearly, your broker doesn't want to put themselves through this kind of crap if they can set themselves up to avoid as much of the processes as possible. But they are not being made to do it by the money laundering checks. It is their choice. It makes sense in the context of their work. They should be looking after money which belongs to the client.
I'm waiting for the ambulance chasers to latch on to the mis selling of SIPPs for people who end up investing in funds they could get access to at a fraction of the charges by taking out an ordinary personal pension.
Unless you're invested directly in a company's shares or have bought a commercial property or such like, there's nothing a SIPP offers you couldn't get a lot cheaper.
SIPPS were a marketing invention of the insurance companies that replaced the old Self Administered Pension Schemes. SASSs were the preserve of business owners who avoided tax by shovelling profits into a scheme that bought a yacht, a villa or their business premises. The pension fund could even make a loan back at minimal interest rates. It allowed wealthy investors to retain control of an asset they already owned, or wanted to own, by using tax exempt profits and avoiding capital gains tax. Some money went to traditional insurance funds, no different to a personal pension fund, and when SASS's were effectively strangled by HMRC, only conventional investments were available and insurance companies saw the opportunity to enter the market.
The idea that a SIPP, as the replacement for the SASS is the sexy and smart way to invest for a pension is the selling point. The sexy stuff on offer is just window dressing, most people want some security and very few people are dumb enough to take the risks that a SIPP allows them to take. The risks only ever made sense if there was a fruity tax break. Paying a few £thousand a year for a SASS and a fund of several million was worth it. Paying a few £hundred on a fund of several thousand is a rip off.
To maintain the illusion of exclusivity of a SIPP, companies for no good reason might restrict access to certain funds except via a SIPP. So you are sold a SIPP on the basis that it makes you are a smart investor because you have more "freedom". Yes freedom to pay through the nose for bog standard investment funds and be taken for a mug.
The same tactic was used to promote personal pensions instead of cheaper Stakeholder schemes by restricting what you could access via Stakeholder at a capped charge of 1.5% to ensure you bought the "regular" pension stuff for which you were charged 5%. Advisers were free to advise against Stakeholder schemes because there wasn't enough "freedom" so Stakeholder was confined to history as a failure. The industry would like everyone to buy SIPPS instead of the cheaper products and the marketing is aimed that way at anyone with more than a few quid to invest.
Only someone in the industry would call a personal pension policy with a few different manager funds a "portfolio". Adviser speak to make it seem something special. Marketing bullshit o perpetuate the illusion you are following in the footsteps of the gentry who used to hold their cash in a portfolio of individual stocks and shares managed by their stockbroker. If you can only get what you want with a SIPP it's because that's the way the industry wants it, not for any other reason.
Whatever way you want your fund "comprised" you can do it without a SIPP if you know what you are doing. Most people don't have the inclination or knowledge to make up their own "portfolio" and all the evidence ever produced proves that moving money around chasing manager performance delivers less than the market.
A "portfolio" should be based firstly on asset class choice, not manager. The choice of manager is only relevant if you are wanting out-performance of your asset class against it's benchmark, otherwise you choose a tracker and select the manager showing lowest fees and tracking error.
You do not need a SIPP to achieve a sensible risk based range of investments. You need a SIPP to allow people to think they are doing something clever and provide space for IFAs to give the impression they can add value and justify fees.
But what does an "ordinary personal pension" look like? From where and how do you open and manage one? They seem to be invisible.
Insurers only manage a limited range of funds themselves, the rest is outsourced to managers they select on merit. So there are many providers and thousands of different funds available from seemingly different managers but in fact the same relatively small pool of delegated specialist managers are used by all of the providers to deliver the goods. The only difference is brand and price.
Anyone employed has or will have will have access to an employer's Auto Enrolment scheme. That scheme must have an "adequate" range of fund options to meet regulatory guidelines. Some schemes give full access to the providers funds which can easily run to a few hundred, sufficient for most needs, but obviously not enough for those who know a manager guaranteed to beat them all and only available through a SIPP.
Unless it was set up by an IFA in cahoots with the employer to extract maximum commission rates on your contributions to rebate to the employer, the AE scheme will give you access to lower cost funds than you could access yourself privately and ought to be the first port of call.
I mailed the FCA about Charles Stanley citing their rules as a reason not to allow third parties to pay into an ISA account. I must say that their response was first class. Fast, (the reply was sent on Saturday morning too), in plain, clear language, with practical advice. Here are the key extracts
"We don’t specifically state that individuals can’t pay into accounts which aren’t theirs. It may be that Charles Stanley have interpreted our rules and from their interpretation, they’ve deemed that they can’t allow outside deposits from non-account holders.
I would suggest that you contact Charles Stanley and ask them which one of our regulations they believe doesn’t allow for outside deposits. All of our rules are publically available and they should be able to refer to whichever rule they’re relying on or explain if they have certain interpretation of a rule of ours. "
So I have just done exactly as they suggested.
A peer-to -peer lending scheme where you lend to renewable energy schemes
I must say that at first glance I like the look of it. However they themselves emphasise that it is a real long term investment. In most cases it seems that you would be locking away your capital for a minimum of 15 years.
The people behind it seem respectable though, and with the right kind of experience. One of them was involved in starting Zopa, it seems.
Your energy scheme seems clean (excuse the pun). It's an FCA authorised firm and the compensation schemes apply. (But do not apply to an unlucky investment choice, of course, merely if there has been some form of wrongdoing.) The likely snag, it seems to me is that you hold a debenture, a loan note, a bond, call it what you will. I doubt that there would be any requirement upon the arranger to buy it back in the event you should want out. It is also, it seems, not an instrument that will be traded on a recognised exchange. So, to sell would mean finding a matched trade somehow.
For me, personally, it would be a no. I've had my wallet burned by venture capital investing before, I don't intend to do it again. I don't like the illiquidity and I don't like the (very) long-term nature of the investment. I'll more than likely be dead in 15-20 years and how would the executor get the money back?
No wins for me this month......
...£25......