Individual Client Segregation (ICS)
As part of our Share Dealing service, we agree to carry out transactions in investments for you.
In order to settle some of the trades you place in UK shares and bonds we use a ‘Central Securities Depository’ (CSD). A CSD is a financial institution which holds investments, such as UK shares and bonds, and offers electronic settlement services for those types of investments. Using a CSD allows those investments to be transferred electronically in order to settle the transactions you instruct us to carry out.
For us to use the services offered by the CSD we need to open accounts with the CSD. The CSD will hold your investments in one of our accounts. Our standard approach is to use ‘Omnibus Client Segregation’, which means that all of the investments we hold for our customers are held in one ‘pooled’ account at the CSD. Another way of holding your investments at the CSD is through ‘Individual Client Segregation’ which means your investments are held on their own at the CSD, away from the investments of others.
Under Central Securities Depositories Regulation (CSDR), we are required to offer you Individual Client Segregation (ICS), as an alternative to our standard method of Omnibus Client Segregation (OCS).
The ICS service can be added to a Share Dealing Account and/or ISA. Below we have outlined the similarities and differences between OCS and ICS to help you make a choice. We have also created a document How we hold your assets at a Central Securities Depository (CSD) (PDF, 89 KB) which takes you through these factors in detail and the features and costs associated with each.
Read our disclosure document (PDF, 89 KB).
How we keep your assets safe remains the same across both OCS and ICS?
Regulatory obligations require us to protect your cash and investments in two ways – by keeping them separate from our own (known as segregation) and by being part of the FSCS, or Financial Services Compensation Scheme. These are explained below:
- Segregation of Assets In simple terms, this means keeping your cash and assets separate to ours so we know exactly what belongs to you. This means that if we were to stop trading, your cash and assets could be returned to you:
Stock
We register all customer stock we hold in the name of a nominee company. This is a non-trading company and the record of accounts clearly identifies which stock are held on behalf of customers.
Cash
All client money held is held in bank accounts that are only used for holding client money. This clearly keeps client money accounts separate from accounts we use for our own money.
- Financial Services Compensation Scheme (FSCS) If we stop trading and the segregation arrangements above didn’t work, customers classed as retail clients would be able to claim up to £85,000 through the FSCS. Your right to claim under the FSCS is unaffected by whether you have an ICS or OCS account.
There are some differences between OCS and ICS. These include differences relating to:
- If there were any shortfalls in securities within the account if we were to become insolvent and therefore unable to act in order to remedy such a shortfall. The background and treatment of such shortfalls differs between the OCS and ICS. The associated risks and description of this can be found in point 4.3 of our ‘How we hold your assets at a Central Securities Depository (CSD)’ (PDF, 89 KB) document.
- Charges – An ICS account requires a greater amount of time to set up and service on an ongoing basis and so there are additional costs for this type of account.
The costs for the ICS service are reflective of the additional activities we need to complete in order to administer your account. For example, some of our usual activities have to be completed on an individual basis and therefore the cost of the account reflects this increased administration. The charges for the ICS service cover all the Share Dealing Accounts and ISAs you hold with Bank of Scotland Share Dealing.
Ian the ICS user
Ian has opened a Bank of Scotland Stocks and Shares ISA and intends to trade periodically, clocking up one trade per quarter; he’s decided to use the ICS service.
This year Ian will pay:
|
Charge |
Amount |
|---|---|
|
Charge ICS set up charge |
Amount £1,000.00 |
|
Charge Customer Administration Fee |
Amount £36.00 per year |
|
Charge ICS annual service charge (Charged each October and pro-rated from account opening) |
Amount £6,500.00 per year |
|
Charge Online dealing commission (4 trades x £9.50 each) |
Amount £38.00 |
|
Charge Stamp duty (0.5% of £19,962 - his investments minus dealing commission) - |
Amount £99.81 |
|
Charge Total |
Amount £7,673.81 |
Ian’s investments total £20,000, which means that his charges are 38.4% of this.
We want you to make an informed decision about how you’d like your investments to be held. There are other providers who may offer alternative ways of gaining ‘Individual Client Segregation (ICS)’ which may have different benefits and might be more cost effective for your needs. One such way could be by means of a Crest Membership Account. Although we do not offer this type of account, you can search for providers who do on the Personal Investment Management and Financial Advice Association (PIMFA) website at https://www.pimfa.co.uk/ in the ‘Managing your Money’ section under ‘Find a Firm’.
How do I open an ICS account?
If you’d like to add the ICS service to your account you must complete both steps below:
Step 1: Open a Share Dealing Account or Stocks and Shares ISA online.
The account you open will not automatically have the ‘ICS service’ added until you complete step 2. If you already have an account you can skip to step 2.
Step 2: Complete and return the application form (PDF, 57 KB) for the ICS Service.
This will tell us to add the ICS service to your Share Dealing Account and/or ISA with us. Once we receive the form, we will collect the Set Up charge from your debit card within 10 working days. Following the Set Up Charge payment being taken successfully the conversion will take approximately 15 working days to complete. Unfortunately if this payment cannot be collected we will not be able to offer you the service.
We will write to you once the conversion has taken place to inform you that the service has been added. Until we have contacted you, your account will operate as a standard account with any trades placed settling within Omnibus Client Segregation at the CSD.
Our address to send your completed form to is
Bank of Scotland Share Dealing
Lovell Park Road
Leeds
LS1 1NS
Bank of Scotland Share Dealing Service is operated by Halifax Share Dealing Limited. Registered in England and Wales No. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire HX1 2RG. Authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.