The FCA has published Consultation Paper 14/9: Client money held in Individual Savings Accounts (ISAs) (CP14/9).
All money held within stocks and shares ISAs must be held for the purpose of investing in qualified investments as set out in the ISA regulations. This creates a clear separation between cash ISAs and stocks and shares ISAs. The changes announced in the 2014 Budget will soon allow cash savings to be held in stocks and shares ISAs, permitting individuals to use stocks and shares ISAs for both deposit and investment purposes. This change has implications for the FCA’s client money rules.
In CP14/9, the FCA is consulting on proposals that all monies that investment firms hold within stocks and shares ISAs should be held as client money. If these rules remain unchanged, the changes announced in the 2014 Budget would require firms to separate client money from non-client money within the ISA wrapper. In addition, the FCA is proposing an option to allow these firms to hold cash ISA money as client money.
The deadline for comments on CP14/9 is 25 June 2014. The ISA changes are coming into force on 1 July 2014 which is the reason why the consultation period is short. Subject to feedback, the FCA proposes to amend the relevant FCA client money rules as set out in CP14/9 to facilitate the forthcoming ISA changes before this date.
View Consultation Paper 14/9: Client money held in individual savings accounts, 11 June 2014