By Tom Winnifrith | Monday 10 July 2017
The ShareSoc blog it can, now and again, have some cracking material - today it exposes Interactive Investor Limited for putting its clients cash at risk to screw extra cash out of them. This is shocking. and anyone with a stockbroking account at iii or TD Waterhouse which it now owns should open an account elsewhere and start moving spare cash and the proceeds of share sales there. iii is clearly run by total bastards.
iii has written to TC customers. And ShareSoc has the letter. It writes:
The key paragraph is this:
To ensure we maintain our ability to appropriately diversify client money across highly rated, strongly capitalised banks, our regulator, the Financial Conduct Authority (FCA) has given us, and other similar firms, permission to deposit some of our client monies in fixed term deposits for up to 95 days. This is a change to the current maximum deposit term of 30 days.
ISTM that there is zero benefit for clients from this change and, indeed, TD goes on to say:
However, in the extremely unlikely event of default by us there may be a delay in distributing the funds
I.E. client risk is increased (albeit in unlikely circumstances). I am grateful to my ShareSoc colleague, Cliff Weight, for making the following estimate of the financial gains to TD from this change:
Suppose I have on average £10k cash in my account and they can get 2.01% on 90 day money and 1.51% on 30 day money (I googled these rates for $1m amounts). The difference is 0.5% p.a. =£50 per year.
They should split the benefit 50/50 with investors in my view.
If they have 100,000 customers, this little ploy will net them £5million extra profits a year.
So extra risk for TD’s clients, with no benefit, and a nice financial reward for TD. I find this completely unacceptable.
It is unacceptable. Many clients will not realise what is going on here but it is just plain wrong. It is the sort of thing that gives capitalism a bad name. It shows that the mothers who run iii are totally happy to screw their clients and in the face of such behaviour there is only one way to respond: take your business elsewhere.
Tom Winnifrith notes: The above article has been revised after publication as per my agreement with Roger Lawson here. Although Roger Lawson may not have reported his ownership of shares in a company when writing about them in all cases, or did not report his trading in those shares, as may be considered best practice, I acknowledge that the rules about ShareSoc publications did not require such repetition and I acknowledge that he acted without any intention of making any financial gain to himself and indeed no such gain was made.
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