iDealing - terms and conditions

[Scripophilist]

Been looking at some new platforms and have received a copy of Idealing terms and conditions. It is interesting to note that Client money is not segregated from company funds.

Specifically the terms are:-

Money is not held in segregated account as defined in FSA client money rules.

Idealing under no obligation to pay interest on funds as defined by FSA rules.

Idealing will use your money in the course of its general business.

----

Of course the issue with this is that if you have money held with Idealing and there is a problem, Say a fraud or insolvency, then you will lose your money.

Currently under FSA rules to do with segregaton, client monies are protected.

I consider this a risk that is too great. No disrespect to Idealing but if I am swapping money in an out of an account I want the minimum possible risk of losing those funds.

At least some legal redress is a minimum.

 

[oatman]

I'm not sure if this applies generally or if indeed it still applies, but previously I discovered there are 2 types of segregated acccounts. Your account could be segregated from company funds but not from other seg accounts. In other words, if a seg account went down big time, it could take other seg accounts with it.
Maybe worth enquiring if you're especially worried about security of funds.

 

[bonsai]

Scrip
I'm not sure that what you have said is the full story.

Client funds I believe are segregated and held with Bank of Scotland. But there are not individual client accounts.

?

 

[Scripophilist]

Hmm, Seems very specific on the terms I have in front of me but that's why I posted. Interested to hear other peoples views. It's seems to state very clearly that funds will not be segregated and in the event of insolvancy you will be treated as a company creditor.

 

[bonsai]

I am now quoting from their terms and conditions

"Idealing holds all client funds in a Pooled cash account held on behalf of clients with the Bank of Scotland. This account is designated as 'Client Money' in accordance with SFA Client Money Regulations."

The SFA is the Securities and Futures Authority.

The main protection of one client vis a vis another is that all
transactions have to be prefunded.

Hope that helps.
But if still in doubt, you must talk to them and get it in writing.

 

[theknifemac]

Bonsai

Could T&Cs be out of date as I thought the SFA had been replaced by the FSA some time ago ?

Mac

 

[Scripophilist]

I have it in writing from them.

Page 7, Section 12 terms and conditions, Client money.

Sub section 3

As your money will not be segregated from our money and will be used by us in the general course of our business in the event of our default or insolvency you will rank as a general creditor of ours.

 

[Scripophilist]

Are there different rules for different accounts. I can't sign terms like these. Not with the money I will be moving around. Especially as there is no basis on which the issuing company will not automatically provide me a basis for audit.

 

[bonsai]

The other risk of course, is that Idealing do not follow the Regulations.
But in that event, as a private Client of a UK firm regulated by SFA you would receive the protection offered by the Investors Compensation scheme which is managed by the FSA.

If you want good protection under that scheme, I seem to remember a figure of 90% up to a maximum.
So keep below the maximum ?

T&C still effective.

 

[Scripophilist]

Section 12, Item 1

Any money recieved from you shall be held by us in a nonsegregated account of ours and will not be held as Client money as defined in the FSA's client money rules and will not be subject to the protections conferred by those rules.

 

[bonsai]

just been to their web site and it seems they offer different accounts for different things.
so we may be at cross purposes.

 

[Scripophilist]

Would still be suprised that they are offering a product that is explicitly outside standard FSA terms. Worth checking a current copy of your account terms IMHO.

 

[bonsai]

I am not quoting from an 'offering'. Mine is an exisiting account.

 

[Scripophilist]

Got a response from Idealing this afternoon.

"Thank you for your e-mail. We can confirm that only CFD/Margin accounts are treated in this way. Please let us know if we can be of further assistance."

So all CFD/Margin accounts are affected it would appear.

 

[bonsai]

lol
mine is a share dealing account !

so we were at cross purposes.

 

[Scripophilist]

Makes me wonder what else is buried in other terms out there.

 

[cassiopeia]

I had a long conversation with idealing on this issue and a few others regarding their margin accounts. A big problem with idealing is their financing rates. You pay around 6.5% long and you get 0.5% short if my memory serves me correctly; daylight robbery in my opinion. You also get no interest on margin.

There is always a catch, spread betting firms always have a hidden cost, some requote, other use large or biased spreads; idealing have uncompetitive financing rates! You need to make 6% pa just to stay even, that's ignoring inflation!

 

[Scripophilist]

Had confirmation through from three additional companies and none have the same terms as Idealing.