The security of client assets is of the utmost importance to us at Chelsea.

Key protections for investors

The Financial Services Compensation Scheme (FSCS) protects:

• Bank deposits: up to £85,000
• Investments: up to £85,000

Chelsea Financial Services has a very healthy bank balance and no direct exposure to the market. This makes it very unlikely that Chelsea would collapse. That being said, if Chelsea was to collapse, your investments would not suffer.

This is because investments are held under a nominee arrangement on a platform or directly with an asset manager, not Chelsea. Chelsea’s chosen platforms are Aegon Retail and Platform One Limited.

If one of our platforms collapses, you are protected up to £85,000 for cash and £85,000 for investments in total.

You may be interested to know that client assets are held in accordance with the FCA CASS (client money rules). All money/assets are held away from our platform’s balance sheets and essentially in trust for the benefit of the underlying investor. This structure is designed to protect the investor in the event of corporate failure. Aegon and/or Platform One holds the client records, but the assets are in a separate nominee company.

When you invest in funds on a platform, your investments are held by the platform but you are identified as the owner (a nominee structure). This allows the platform to administer your investments, while ensuring that you are clearly identified as their owner. This means that in the event of a platform becoming insolvent, any money the platform owes will not be paid out of your funds.

The FSCS treats this as a deposit with the platform’s bank (Aegon and Platform One only use banks that have met their strict requirements). Your cash is therefore protected, by the FSCS, up to £85,000. Please note that if either Aegon or one of the banks collapses and there is a claim, the FSCS would take into account any other deposits also held by that investor with these banks.

In the event you were to suffer financial loss directly because a fund manager of a unit trust or OEIC became insolvent, you would be able to claim under the investment business section of the FSCS.

Each FCA-authorised UK-based fund manager on the platform will qualify for the investment element of the FSCS.

If the fund manager becomes insolvent and is unable to return your money, you will be protected for 100% of the first £85,000 held within it.

For example, if two different fund managers became insolvent, you could claim up to £85,000 from each. Please note that overseas fund managers are not covered by the UK FSCS unless they are FCA authorised but may offer an alternative compensation scheme.

In the event of a fund manager becoming insolvent, you could possibly reduce your risk by limiting your holdings to £85k per fund manager.

For example, if you held £85,000 in a fund managed by Manager A and £90,000 in a fund managed by Manager B and both managers were deemed to have incorrectly administered your funds, your investment with Manager A would be fully covered by the FSCS but you would only be protected up to £85,000 for your investment held with Manager B. £5,000 would not be protected by the FSCS.

In the UK, in recent cases where banks and building societies have collapsed, the UK Government has made a number of interventions to ensure that customers have not lost their money.

Please do not hesitate to contact us if you require any further information or explanation or visit the Financial Services Compensation Scheme website at www.fscs.org.uk/consumer