It was the greatest shock of my life. Last week I came home from a lovely two-week holiday in Ulster and Wales to find my £111,000 savings had gone missing.
I knew going away on holiday was expensive these days — but not that expensive.
When I got through my front door on the Monday night, I waded through the pile of post: magazines, invitations, junk mail — and a letter from Leonard Curtis Business Rescue & Recovery.
The blood drained from my face as I read the opening words in capital letters: ‘SVS Securities PLC (in special administration)’.
‘SVS Securities was the online share broker I’d been using to buy shares with my savings for a decade’
SVS Securities was the online share-broker I’d been using to buy shares with my savings for a decade. Some 13,500 clients, with a total of £60million in investments, were now in the same deeply perilous boat as me.
The letter went on to say SVS was a failed investment firm and that, ‘in view of the financial and operational position of the company on August 2, 2019’, the Board resolved to put the company into special administration. On August 5, a court placed the company in special administration.
More importantly, what about my money?
‘Our priority is to facilitate an orderly and coordinated return of client money and custom assets to rightful clients to the fullest extent possible,’ the letter said.
To the fullest extent possible! That could mean £111,000 or it could mean nought pounds.
This financial meltdown had happened a fortnight before I read that heart-stopping letter — and yet I was told nothing about it as I played golf in County Down and swam in Pembrokeshire.
I immediately tried to ring the helpline number given in the letter but — it being 9.30pm — there was no one there.
Harry Mount is editor of The Oldie magazine
I rushed to my computer and the SVS website. It had been frozen, with a chilling message on the screen from Leonard Curtis, saying that SVS Securities PLC was in special administration.
This meant I didn’t even know how much of my money was being held by the company.
Like many people, I rely so much on online banking that I always just log on to get a statement rather than keeping paper records. The only reference to the £111,000 was a note I’d scribbled down in my diary a few months ago.
I may well have more in the account thanks to dividends that have been added since — and any stock market gains.
Needless to say, I’ve had no way of selling the shares in the past fortnight as the stock market has tumbled.
I had a near-sleepless night, tossing and turning as I thought about the years spent earning that money and the very generous gifts from my family that had added to it —and thinking how on earth it could be possible for a company to lose it.
SVS had seemed a respectable firm, with an address in the City of London, happily trading since 2002. They acted as a broker — someone who buys and sells shares on your behalf — and a fund manager.
I found SVS when searching online for a firm with low fees.
There are lots of these online brokers, offering much lower commissions on share transactions than the old-fashioned, pre-internet stockbrokers. I had never used SVS as a fund manager, although, to begin with, I did get calls suggesting I should buy the company’s recommendations — all of which I refused to do.
Investors with SVS Securities shut out of accounts after broker collapses
Will money be returned and what happens next? Read more here.
Instead, I only ever used SVS to buy and sell shares — and highly respectable, blue-chip shares at that. Because the SVS website is still frozen, I can’t get a rundown of those shares but I know my holdings were in leading companies such as Shell, GlaxoSmithKline, BAT, BAE and easyJet. In other words, companies that are in no danger of going into sudden administration like SVS. I thought I had been hyper-cautious.
This wasn’t like this year’s Neil Woodford disaster where the former genius sharepicker started making disastrous choices for his funds and then denied his clients access to their money as their investments tanked. Surely, I thought, as I lay awake in mental agony in my North London flat, no one could just take my shares away from me?
The next morning, I rushed to the phone to ring the helpline — or the notmuchhelpline, as it should be called.
The FCA stopped all SVS’s regulated activity and frozen their clients’ money and assets on August 2
I asked the lady on the phone whether my shares were safe. She said she was unable to say — and that I would have to wait until the next letter from Leonard Curtis.
My heart started pounding all over again. After more frantic research, I discovered that the FCA had stopped all SVS’s regulated activity and frozen their clients’ money and assets on August 2.
They did this, ‘acting on intelligence’ about where SVS was investing its clients’ money — so, in other words, their investment management side had messed up, but that still jeopardised the share-dealing operation I’d been dealing with.
The FCA has conducted urgent supervisory work and ‘identified serious concerns about the way in which the business was operating’.
How to protect your savings
1. Make sure the company you’re investing with, and the broker you are using, are on the Financial Conduct Authority register and will pay out under the Financial Services Compensation Scheme. Search for them by visiting register.fca.org.uk.
2. Be wary about investing more than £85,000 in one firm — as this is the maximum payout you will receive, per firm, from the Financial Services Compensation Scheme if the business fails.
3. Make sure you know what you are investing in. If you don’t recognise the names of the companies listed in your portfolio, this is usually a bad sign.
4. If you use an investment service, make sure your money is ring-fenced in a nominee account.
5. If you’re unsure, speak to a financial adviser.
One website, financialclaims.com, alleges about SVS that ‘around 90 per cent of the assets under management were invested in high-risk funds with no attempt to ensure suitability.
‘The business was unable to demonstrate basic due diligence on its investments’.
The website went on to say that the FCA has been worried about SVS’s high-risk investments since 2017, several of which were closely linked to senior figures at the firm.
In the course of two days, I furiously researched what happens to your money when an investment company goes into special administration.
The crucial thing is that your investment company should be registered with the Financial Services Compensation Scheme (FSCS). This allows ‘eligible clients’ to get compensation of up to £85,000.
Whew! My liability has fallen to £26,000 as long as I’m an eligible client. I’m pretty sure I am — but that isn’t confirmed in my heart-attack letter or by the notmuchhelpline.
I got in touch with two investment specialist friends. They’re both financial planet brains but, in the vacuum of information supplied to me, they only provided highly well-informed speculation.
What is now likely to happen is that all the remaining money (including any share dividends) held by SVS will be distributed between the clients on a pro rata basis. Any shortfall up to £85,000 will be covered by the compensation law.
Any remaining shortfall — and I’m out of pocket.
There’s also a big question as to whether I, and the other SVS clients, should have to pay for the administration costs of this nightmare.
‘I asked the lady on the phone whether my shares were safe. She said she was unable to say’
Administrators are entitled to take their costs from clients’ funds. But, when another investment company, Beaufort Securities, collapsed last year, the FSCS ended up paying the administrator, Pricewaterhouse- Coopers, without the clients taking the hit. There’s no guarantee that will happen in my case.
So what now? All I can do is sit and wait. The original letter says the administrators will be in touch with their proposals by September 27. Another month of acute anxiety and sleepless nights then.
Another month when I could be attacked by money-sucking jackals, too.
All the advice I was given shared the same point: be wary of anyone telephoning you offering to help you retrieve your money. Claims management companies are often scams. Ignore them.
I realise that I’m one of the lucky ones. I’m 47, in good health with a good job, with access to investment professionals who can give me measured advice.
Imagine if I were 40 years older, relying on that frozen money for my retirement with no one to advise me — apart from the notmuchhelpline.
Heavily bruised by this summertime misery, I can now give readers some crucial advice. Make sure your investment firm is covered by the FSCS. Don’t invest more than £85,000 in any one company. And beware what horrors await you in the post.
Leonard Curtis declined to comment.
Harry Mount is editor of The Oldie magazine.