This morning the FCA published Policy Statement 14/9: Review of the client assets regime for investment business (PS14/9).
In PS14/9, the FCA sets out finalised changes to the client money and custody assets (client assets) rules. These changes affect approximately 1,500 FCA regulated firms that carry out investment business. The changes are intended to improve investment firms’ systems and controls around segregation, record keeping and reconciliations and set out how such firms must address client assets risks within their business. However, the FCA is not proceeding with most of its proposals it consulted on around the client money distribution rules. The FCA will conduct a further review of these rules in line with HM Treasury’s implementation of the special administration regime review recommendations. A further consultation will be published later this year.
All investment firms to which the Client Assets sourcebook applies should review the instrument set out in Appendix 1 of PS14/9 and establish how the changes the FCA is making will affect their business. If the changes affect a firm, the firm will need to comply with the new rules by the dates set out in Chapter 2 in Table 1 of PS14/9.
Key dates are:
- 1 July 2014 – certain rules and guidance come into force providing clarifications to existing requirements, introducing optional arrangements with which firms may choose to comply and limiting the placement of client money in new unbreakable term deposits;
- 1 December 2014 – certain rules and guidance come into force relating to the provision of information to or obtaining the agreement of new clients and the documenting of agreements and arrangements with any new counterparties with whom firms deposit or otherwise place custody assets or client money. These include requirements to notify the client of certain matters if operating the banking exemption and mandating the use of template acknowledgment letters with new client bank accounts and client transaction accounts; and
- 1 June 2015 – all of the remaining rules and guidance come into force and firms will need to ensure they fully comply with all of the new rules set out in Appendix 1 to PS14/9.
View FCA finalises rules to improve the protection of client money and custody assets, 10 June 2014
View Policy Statement 14/9: Review of the client assets regime for investment business, 10 June 2014