The Financial Services Authority (FSA) has sent a letter and report to the chief executive officers of major insurance brokers and investment firms which are able to hold money or assets on behalf of clients. The letter draws attention to the FSA’s concerns over the handling of clients’ money and assets.
It follows a letter sent to firms in March 2009, which explained the obligations a firm has to protect clients’ money and assets and set out the FSA’s intention to conduct further firm visits during 2009.
Subsequently the FSA visited a range of firms and found a number of failings. As a result, the FSA took the decision to write to chief executives with an accompanying report containing details of visit findings, and highlighting some of the weaknesses discovered.
These included:
- poor management oversight and control;
- lack of establishment of trust status for segregated accounts;
- unclear arrangements for the segregation and diversification of clients’ money; and
- incomplete or inaccurate records, accounts and reconciliations.
The FSA has already taken measures against a number of the firms that it visited, including referring two firms to enforcement, freezing a firm’s assets and commissioning skilled persons reports.
Sally Dewar, managing director of risk, said: “The client asset rules are a key protection for consumers. It is simply unacceptable that firms are not ensuring that consumers get the appropriate protection. We have pointed out our concerns to firms and will be following up these concerns with further visits this year.”
The report also includes examples of how firms should meet FSA expectations in relation to compliance with its requirements. Over the course of the year, the FSA will be increasing its visits to firms to assess how well these are being met.
Note:
The letter and report can be found on the FSA website.
