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Client Money - Proposed Rule Changes


Sep 17 2012

Client Money – Proposed Rule Changes

Relevance:                   All firms.

Action required:           Awareness of proposed changes to Client Money Rules.

The FSA previously indicated that it wanted to overhaul its rules on Client Money (CASS) and in particular those involving insurance intermediaries.  They have been working with various trade bodies and broker groups in a “pre-consultation” exercise and they have recently issued their Consultation Paper.

The document is a comprehensive overhaul of the many aspects of Client Money arrangements and as well as looking to change some current requirements there is also the introduction of procedures designed to protect Client Money in the event of a firm going out of business.

The full Consultation Paper can be found at: http://www.fsa.gov.uk/library/policy/cp/2012/12-20.shtml

Consultation closes 30 November 2012; feedback and final rules expected by end June 2013; implementation of new rules delayed for 12 months to allow firms to gear up to the changes.

This is a major piece of work for all firms that collect insurance premiums, which will be the vast majority of brokers and intermediaries.

There is a very clear indication from the FSA that they believe firms could be in breach of CASS rules due to potentially confused wording in TOBAs or even the lack of a TOBA.

It is our intention to discuss the items contained in the FSA paper with each of our client firms as we meet over the next few weeks, especially with regard to existing TOBAs and Client Money arrangements.  In the meantime, we suggest that senior management of firms might gain a benefit from reading the FSA paper, using the link above.

We believe that this review contains significant issues that will affect all firms, irrespective of whether they have permission to hold Client Money or not.  We will work with you to ensure your firm is in the best position to be compliant with the proposed new rules.

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