Alternative to a nominee account

[ZootAlors]

Hi all,

It's been about ten years since I last invested in equities, so I'm a bit out of practice but I would like to get back into the market.

The last time I had equities, I did it through nominee accounts. However, experience has taught me that there are a number of disadvantages attached to this and I'd rather be a certificate holding investor.

I was just going to find a broker that would do the trades for me but having spoken to my bank, they said I could be a certificate holder if I do the transaction through the investee company's 'registrar'. Is this right? If so, is there a guide on how to go about doing it? I'm a bit concerned that I don't really know who I'll be dealing with.

Thanks in advance

Zoot

[gryffron]

Hi zoot, and welcome to the Lemon Fool.

Physical share certificates are being phased out from next year. So although there are currently still brokers offering trading in paper certificates, I think you’re wasting your time looking for this now. https://www.sharesoc.org/sharesoc-news/ ... abolished/

So your choices really are nominee or to be a registered crest holder in your own right. Several brokers offer both options.

I’m not sure what you think the problems are with nominee accounts? But IMO they save a whole heap of hassle over paper certificates. Even being a registered crest holder your details will be public.

Gryff

[ZootAlors]

Hi Gryff,

The principal disadvantage from my point of view is that when I had a couple of nominee accounts (one of which was Selftrade), Selftrade unexpectedly placed a burden on existing account holders of providing a large quantity of additional paperwork to prove their identity and if they didn't, they got their accounts frozen.

Luckily, at the time, I had just liquidated everything in order to buy a house but I considered myself very lucky to have not been caught up in that mess. If you're a former TMF poster from that period, you might remember the frustration of those caught up in it. It was at that point I decided I'd never have a nominee acount again.

I'm also not keen on the idea of paying a fixed quarterly fee for what in my case will be a relatively quiet account. I'm not a trader, I just want to buy them and collect the dividends.

If most brokers offer both options, I might have a dig around on the brokers board.

Thanks for your help.

Zoot

[EthicsGradient]

Hi zoot, and welcome to the Lemon Fool.

Physical share certificates are being phased out from next year. So although there are currently still brokers offering trading in paper certificates, I think you’re wasting your time looking for this now. https://www.sharesoc.org/sharesoc-news/ ... abolished/

So your choices really are nominee or to be a registered crest holder in your own right. Several brokers offer both options.

I’m not sure what you think the problems are with nominee accounts? But IMO they save a whole heap of hassle over paper certificates. Even being a registered crest holder your details will be public.

Gryff

That says the government is still wondering about phasing out share certificates, but "from next year" was the EU timetable - the EU will stop the issue of new certificates from 2023, and convert all paper certificates to electronic ones by 2025. But that doesn't apply to the UK now, and I don't know of anything more recent than that "the Government will work with industry, regulators and shareholders in the medium term to determine the best mechanism for converting these paper shares into electronic form, while preserving the rights of existing shareholders" which they said in September 2021 - without then putting any sort of date on when they will do that thinking in the "medium term", let alone when they'll actually make changes.

[gryffron]

The principal disadvantage from my point of view is that when I had a couple of nominee accounts (one of which was Selftrade), Selftrade unexpectedly placed a burden on existing account holders of providing a large quantity of additional paperwork to prove their identity and if they didn't, they got their accounts frozen.

I remember that. They tried to introduce some draconian rules and eventually backed off after protests. Pretty much everything has some money-laundering rules these days. Although since broker accounts are usually tied to a single bank account most brokers are not too difficult. That's equally true regardless of whether you are using the broker to trade paper, crest or nominee.

Gryff

[Dod101]

I responded but obviously my reply got lost in the ether. I sympathise with the OP because I would have all my shares held in certificated form if I could. Over the years though I have transferred most of them to ISAs for the tax benefits and thus am in nominee accounts whether I like it or not.

I still have four or five shareholdings held as certificates, all going back to the last century, around 1994 I think. As has been said, dematerialisation of certificates has been on the cards for years and I think it probably unlikely that the UK will start making the change next year.

Dod

[Alaric]

I remember that. They tried to introduce some draconian rules and eventually backed off after protests. Pretty much everything has some money-laundering rules these days.

Eventually Selftrade were compelled to accept that their intepretation of Money Laundering Regulations was way over the top. The principle which other Brokers usually follow is that if the money or assets come from within the UK financial system, they can be deemed kosher.