Is My Stocks and Shares ISA Protected?

Is my Investment ISA Protected?

With Stocks taking quite a downward turn in the past weeks due to the outbreak of Coronavirus, many investors are asking the question: is my stocks and shares ISA protected?

1. The short answer: no....and yes.

What’s the risk?

Your investments will not be protected from fluctuations in the stock market.

That is the nature of risk with investing – you have the possibility of getting less money back than you put in due to market peaks and troughs.

So, you could in theory lose money as a result of large market fluctuations - thus why the sharp market drop following the Coronavirus impact was quite to concerning for investors. 

But, fluctuations are not uncommon in the market and the wisest thing you can do is to weather the storm - the dip will highly likely return to an upward trajectory and level out once again. We've recently written a blog about what to do with your Stocks and Shares ISA in the face of the recent market disruption, so if you want to read more that's a great place to start. 

Are there protections?

There are protections in certain situations – for example, in the extremely unfortunate event that your fund manager goes bust then you are protected by certain schemes. 

What you need to know is: 

1. If you end up in a sticky situation with your fund manager, then your money is protected up to an extent. 
2. Most ISAs, including Stocks and Shares ISAs are protected by the Financial Conduct Authority (FCA) which is an independent regulatory body. They regulate the conduct for most of the UK's financial bodies. 
3. If your fund manager runs into issues and is unable to repay your money, then you could be compensated by the Financial Services Compensation Scheme (FSCS) for amounts up to £85,000 - per person, per institution. This is the UK's statutory compensation scheme. 
4. This will protect the investments of the vast majority of people - but if you have a considerably large amount of investments (i.e. greater than £85,000) you should ensure your investments are spread across multiple different platforms to efficiently protect your money. 

Read more about Investment ISA Rates.