The confirmation comes after concern from many in the industry over depositor protection rights for clients with funds in wrap cash accounts.
Axa distribution services head of marketing Ian Thomas, who also chairs the Tax Incentivised Savings Association’s platform advisory council, had called for the FSCS to give greater clarity over whether the £50,000 protection limit applies to platforms for the totality of client assets in a cash account or to clients individually.
He also wanted greater guidance over what level of protection clients would get if they already had a bank account with the institution that their wrap provider uses for the cash deposit account.
In response to these concerns, the FSCS issued a statement to Money Marketing saying: “If the wrap provider is acting as nominee for the client, then each individual will get individual protection up to the £50,000 limit. If the client already has a bank account with that institution they would only get £50,000 overall.”
Threesixty partner Phil Young says: “We have had a lot of calls from advisers expressing concerns over this issue so the clarification from the Financial Services Compensation Scheme will be welcomed by IFAs, although it would have been helpful if it had given more communication as the banking crisis unfolded. We are now seeing advisers putting increasing pressure on wrap providers to offer more cash accounts so that they can mitigate the risks of the £50,000 depositor protection applying per person per bank.”