FCA highlights intermediaries’ client money obligations

The FCA has issued a Dear CEO letter to general insurance intermediaries stressing the critical importance of maintaining adequate client money safeguards against the backdrop of the ongoing coronavirus pandemic.

The letter notes that Covid-19 is affecting all the entities the FCA regulates in unpredictable ways, making it more important than ever that firms maintain adequate arrangements for safeguarding the client money they hold for customers. 

The letter specifically requires firms to convene their board, or equivalent governing body, to agree where there is scope for strengthening their client money arrangements. In particular, the regulator is asking firms to look at:

  • The application of client money rules to their business models
  • Governance and oversight arrangements
  • Oversight of third parties, including due diligence
  • Client money calculations and reconciliations
  • Acknowledgement letters for client money accounts.

For further information about the regulator’s requirements in each of these areas, click here to read the CEO letter.

The letter also reminds firms of their obligation to notify the FCA immediately of any material issues or concerns they identify in relation to their client money arrangements – and warns that ‘if we contact your firm in the future, we will expect you to be prepared to explain the actions taken in response to this letter.’ 

If you’re in any doubt at all about whether your firm is fully prepared to satisfy the FCA’s requirements and concerns, our compliance experts can help. Call us on 01925 765777 email info@ukgigroup.com.

UKGI is a trading style of UKGI Limited and UKGI Services Limited which are wholly owned subsidiaries within UKGI Group Ltd. UKGI Limited acts in compliance services and UKGI Services Limited acts in support services. UKGI Services Limited is a wholly owned subsidiary of Total Broker Solutions Limited, which is an appointed representative of Resolution Compliance Limited, which is authorised and regulated by the Financial Conduct Authority (FCA) under reference number 421154. UKGI Limited Registered in England No. 03544014. UKGI Services Limited registered in England No. 04953835. All Registered Offices Number 22 Mount Ephraim, Tunbridge Wells, England TN4 8AS. VAT registration number 347 2664 82.