I'm looking for advice on the relative advantages or disadvantages of nominee accounts compared to share dealing accounts based on share certificates. My bank offers both, and the obvious difference is that the nominee account offers less costly trading, but I'm interested in hearing about any differences in operating the accounts, and any good or bad experiences people have had.
Thanks in advance,
1 - If someone in the nominee company decides to cash in your shares and fly to Brazil you are stuffed and broke. 2 - With a nominee account you get no company reports and normally no shareholder perks, no papers when there is a takeover/merger/rights issue etc etc. 3 - Nominee accounts can (often) be traded over the Internet by you (or someone who has your passwords) paper shares rely on the Post Office (or walk to your Bank) to get the paper to the right place when you want to sell.
Of course you can lose your paper certificates. Item 1 above seems unlikely if it's your bank you're dealing with. The lack of information mentioned is the big drawback, but I think this is being addressed.
(I hold paper certs.)
Tiddy Ogg.
I have both. I don't know whether it would be so for all such accounts, but my nominee account has a pretty awful process for allocating dividends - the delay from payment by a company registrar to arrival on the account is totally unpredictable, and anything up to 10 days. The excuse is that they *have* to go through a reconciliation process (failed/mis-entered/un-entered trades, etc) before *any* of their clients get to see their dosh. I'm not sure I believe it, but that's the way their system works. Other aspects of the service are pretty good... (and I'm not mentioning names)
With a certificated account held direct with the registrar, you'd obviously not suffer this problem, as long as the they'll handle BACS payments - most do, I think. But a cheque in the mail from a registrar might be even worse than my nominee account, I suspect.
Whether any of that is important depends on whether you intend to trade actively; I guess you could avoid dividends altogether if you really wanted to :-)
There is the option of using a broker who provides a direct CREST account - see
I have been doing this for the past 6 years with no problems whatsoever.
And get them replaced after some hassle and (relatively minor) costs.
Hopefully very unlikely, I just think that people should be more aware that there is no magical government protection scheme that is going to replace your life savings if they do vanish in such circumstances.
If you have a certificate based holding, your name and address will appear on the company's register of shareholders, which can be used by boiler room operations and other nasties to annoy you with their scams.
If you have a nominee account, you don't get to vote at AGMs and so on.
Both of these problems are going to be fixed in the near future.
One disadvantage of nominee accounts, not yet mentioned, is that you're tied to that broker. With certs, you can sell them through any firm you like.
Tiddy Ogg.
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