The Financial Conduct Authority (FCA) has sent a ‘Dear CEO’ letter to general insurance intermediary firms reminding them of their obligations to maintain appropriate arrangements for client money. The FCA had reminded general insurance intermediaries of their obligations in a letter in September 2020. As part of its work on financial resilience the FCA has identified shortcomings in the compliance with requirements for holding client money.
The latest letter reminds firms of their obligations to have appropriate arrangements in place for the protection of client money and to continually review the effectiveness of such arrangements.
The specific issues that the FCA mention in the letter are:
- the client money calculation;
- appropriate withdrawal of commission;
- client money bank accounts and acknowledgement letters;
- segregation of client money;
- the co-mingling of risk transfer money with client money; and
- the client money audit.
