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Stockbroker Selftrade recently threatened to deny its customers access to their investments. It has since told them they are to be transferred to Equiniti, but not yet.
Selftrade originally demanded highly personal, intrusive information, supported by certified documents sent through the ordinary post – or accounts would be frozen. In the face of customer outrage the demands have been watered down, but they are still demands.
This is not the first instance known to The UK Shareholders’ Association of a broker taking such abusive action. We are greatly concerned by nominee account providers’ apparent freedom to hold their customers to ransom in this way. The excuse is invariably the Financial Conduct Authority’s requirement that brokers must know their customers, but this sensible obligation is seemingly open to all manner of interpretation. When opening a new account an investor has free choice of provider, but when that provider imposes onerous demands after taking the investor’s money that, to say the least, is grossly unfair treatment.
If a pooled nominee account provider can show that it knows its customers, how it treats them is apparently of no concern to the FCA. That is seriously wrong. Investors who find themselves obliged to use such nominee accounts, which includes those using ISAs and SIPPs, deserve better protection for what may be very substantial investments.