I have just read a report explaining the rules about ISAs, which is generally well written and clear.  But under the heading ‘Is my money protected?‘ the article explains:
Yes, you’re protected under the Financial Services Compensation Scheme (FSCS). If you have a cash ISA with a provider that becomes insolvent, you will be able to claim compensation for the first £85,000. For investments, the limit is slightly lower at £50,000.

An earlier paragraph in the article had explained that the value of investments may go down, as well as up, but if a reader homes in on the heading ‘Is my money protected?‘ the risk element may escape their understanding and there is a danger they might believe that their investment in a stocks and shares ISA is protected from a fall in value, which it most certainly isn’t.

There is a tendency for people to believe what they want to hear.  Writing concise explanations for people with no prior knowledge is fraught with danger.  So, too, is reading concise explanations with no prior knowledge.

This entry was posted on Tuesday, March 22nd, 2011 at 12:41 pm and is filed under DPM. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.