How are my assets protected?

Trusting us with your money isn't something we take for granted. This article explains where your cash and investments are held, who owns them, and what compensation may be available if something went wrong.

NB! The protections mentioned in this article do not cover poor investment performance. It’s important to always remember that markets may go up or down, so you should never invest more than you can afford to lose.

• You are the beneficial owner of your cash and investments, not Lightyear. They're held in accounts separate from our own.
• We never use or lend out your money. Unlike a bank, we don't lend customer funds to third parties.
• Your assets are out of reach of our creditors, and would be returned to you in the unlikely event of our insolvency.
• If there was still a shortfall, compensation may be available. How much depends on where the money was held.

Lightyear UK Ltd is an investment firm authorised and regulated by the Financial Conduct Authority. This means we're bound by strict regulatory obligations in how we handle and protect your money and assets:

1. You are always the beneficial owner of your cash. Your uninvested cash is held in ring-fenced accounts, separate from Lightyear's own money. It's deposited with banks and Qualifying Money Market Funds (QMMFs) under legally binding agreements confirming that this money belongs to you, not Lightyear.
2. GBP cash is held in a mix of UK banks and Qualifying Money Market Funds (QMMFs), EUR cash is held in a mix of UK and EU banks, and USD cash is held in UK banks. We currently hold your uninvested cash with:

• Citibank N.A. (UK branch) and Citibank Europe plc (German branch)
• NatWest Bank (in UK)
• Federated Hermes QMMF (in UK)

3. The UK banks we use are covered by FSCS. In the event they failed, we would claim on your behalf. There is a total you can claim at any one banking institution. If you hold personal accounts or money with other platforms in the same banking group, this may reduce the amount you get back through Lightyear.
4. Where non-GBP cash is held in banks outside the UK there are separate, local deposit protection schemes instead of the FSCS. Lightyear holds some EUR cash with Citibank Europe plc, which falls under the EU's Deposit Guarantee Scheme rather than the FSCS.
5. Lightyear never uses customers' money or investments to cover its own needs. This also means that, unlike banks, we do not lend customers' money out to third parties.
6. You are the beneficial owner of all your investments on Lightyear. Your assets are held in separate accounts from Lightyear assets, which you can read more about in our article Who is the owner of the securities I buy?.
7. This means that all customers' assets are inaccessible by our creditors. They would be returned to you in the unlikely event of Lightyear's insolvency.

• Qualifying money market funds (QMMFs) are a type of mutual fund that invests only in highly liquid, short-term debt from the likes of governments and financial institutions. When your uninvested cash is placed in a QMMF, it is held as fund units (protected under safe custody rules) rather than as a bank deposit. These funds offer high liquidity with a very low level of risk and UK regulations allow for brokerages to hold customer money in them.
• A QMMF must meet specified, higher regulatory standards for quality and liquidity than other money market funds. We carefully review and monitor any QMMF we use to ensure that it is stable, liquid and continues to comply with the requirements of a QMMF. We only work with large, reputable fund managers.
• QMMFs offer diversification, spreading risk across a wide range of issuers. They also provide a return, some of which we pass on to customers in the form of interest payments on uninvested cash you hold in your Lightyear account. If you’d prefer your uninvested cash not be placed in a QMMF you can opt out of receiving interest on that cash via settings in the App.

Yes, UK customers are covered by the Financial Services Compensation Scheme (FSCS) but the amount you may be eligible to claim depends on what's affected:

• Investments and cash held with Lightyear: if Lightyear were to fail and there was a shortfall in the assets or money we hold for you (for example, due to fraud or a failure to meet our regulatory custody obligations), you may be able to claim for losses through FSCS. The FSCS investment protection covers up to £85,000 per person, per firm. This limit is separate from, and lower than, the deposit protection limit and does not cover losses due to poor investment performance.
• Cash held with our UK banking partners: if a UK bank we used failed, we'd claim compensation on your behalf under the FSCS deposit protection.
• Cash held with our EU-based banking partners: Lightyear may hold non-GBP cash in banks outside of the UK. Cash held in non-UK banks is not covered by FSCS deposit protection. Cash you deposit in EUR may be held with Citi Germany which falls under Germany's statutory deposit guarantee scheme (EdB).
• Cash held in Qualifying Money Market Funds: GBP cash is held in a mix of UK banks and QMMFs. Deposit guarantee schemes are not relevant to QMMFs. The QMMF depositary will hold assets in a segregated account which should therefore be available in the event of their failure. The FSCS deposit protection does not apply if there is a shortfall in the value of assets. Separate compensation may be available where this shortfall is due to fraud, negligence or failure of the depositary to comply with their regulatory obligations.

For more detail on the amounts you may be eligible to claim for, refer to information on the FSCS website. Compensation limits are per person, per institution, and businesses may be treated differently. If you hold accounts or money with other providers in the same banking group, that may reduce what you'd get back through Lightyear. If a stock or fund falls in value, no compensation scheme applies.