How we protect your assets
Protection of your money and your assets is paramount to M&G. The Financial Conduct Authority, our regulator, lays down firm rules on how we may handle your money and we follow these to the letter.
Keeping your money safe
Throughout this section we will refer to client assets: these are any units or shares which you own in a fund such as an Open-Ended Investment Company (OEIC), Unit Trust, or through an Individual Savings Account (ISA).
When you buy shares in an M&G fund, you complete an online application and make the appropriate payment. That payment is then placed in M&G’s client money bank account. We then pay for the shares you have bought by transferring the money from this bank account to the fund on fund settlement date. Your money will flow through our corporate bank account on its way to the fund.
If there is a problem and we cannot buy your shares, we will hold your money in the client money bank account. We have an agreement with the bank that money held within a client money bank account cannot be subject to claims from our creditors if we become insolvent.
Client money accounts
No interest is paid on balances held in client money accounts. This is because the money is not expected to remain in the account for very long. In the event that this money is not claimed, the financial regulator has clear rules. For balances which have remained dormant for six years or longer, we are permitted to donate them to charity so long as we have made strenuous efforts to contact the owners. We will always pay back the money if we re-establish contact with the owner.
Once you have bought shares in a fund, they are recorded in a nominee name on our register. Shares are held in the name of M&G Platform Nominees Limited. A nominee is a company which holds your assets in its own name but with you registered as the beneficial owner. Once more, this is to protect your money. Assets held in a nominee account are protected from creditors if M&G becomes insolvent.
If you decide to sell your shares in a fund by sending us the appropriate request, we sell the shares on your behalf. The proceeds are received into our corporate account and then transferred into our client money bank account. We then pay this cash from our client money bank account to your nominated bank account. Should this movement of cash fail for whatever reason, we will hold your money in a client money bank account where it will stay until you claim it.
Where you hold cash in our Cash Park this is held in a Client Money Bank Account. Interest is not paid on any cash held in a Cash Park.
Other important information
As you would expect, we carry out regular reviews on the banks we use to ensure that they are fit to hold your money and any money in our own corporate account. We maintain detailed records of all client money and assets as required by our regulator. In addition, our own controls are reviewed annually by an independent external auditor on behalf of the Financial Conduct Authority.
What happens if M&G does become insolvent?
Any of your cash held in a client money bank account is ring-fenced: it cannot be used to pay our creditors.
In the event that the bank becomes insolvent, we will make a claim on your behalf against the bank. If the bank cannot meet its obligations in full, then any shortfall may have to be shared by everyone with money in the client money bank account.
If M&G becomes insolvent while your transaction is incomplete — such as the flow of money on fund settlement date where the client money passes through our corporate account on its way to the fund (all within the same business day) — it is possible that your money will not be protected and you will not own the shares you requested.
There is one last backstop. If M&G becomes insolvent, you will be covered by the Financial Services Compensation Scheme (FSCS), a statutory body. If we cannot meet our obligations in full, the FSCS may pay you compensation. This will depend on the type of business and the circumstances of the claim. Most types of investment businesses are covered for up to a maximum of £85,000 for each investor. For further information about compensation arrangements, please contact the FSCS at: The Financial Services Compensation Scheme, 10th Floor, Beaufort House, 15 St Botolph Street, London EC3A 7QU.