Archive for the ‘Regulation’ Category

HM Treasury publishes consultation on financial regulatory reform

Monday, July 26th, 2010

The Financial Secretary to The Treasury has today announced the launch of the Government’s consultation on financial regulatory reform.

The consultation, entitled A new approach to financial regulation: judgement, focus and stability can be found on HM Treasury’s website at http://www.hm-treasury.gov.uk/d/consult_financial_regulation_condoc.pdf

 The consultation sets out the details announced last month – namely the creation of Financial Policy Committee (FPC) and Prudential Regulation Authority (PRA) within the Bank of England, and the Consumer Protection and Markets Authority (CPMA).

 The consultation paper raises a number of questions that HM Treasury would like answering. HM Treasury request that replies or any questions should be sent to financial.reform@hmtreasury.gsi.gov.uk  or by post to:- 

Financial Regulatory Strategy

HM Treasury

1 Horse Guards Road

London SW1A 2HQ

The consultation closes on 18 October 2010.

Should you wish to discuss this or any other aspect of the regulations, please contact:

Steve White
Head of Compliance and Training
Tel. 020 7397 0222
Email whites@biba.org.uk

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FSA issue Dear CEO letter on Client Money and Assets

Monday, January 25th, 2010
 
The Financial Services Authority (FSA) has sent a ‘Dear CEO’ letter to firms raising its concerns about the handling of client money and assets.  The Dear CEO letter from Sally Dewar, FSA Managing Director, Risk, has been sent to around 1,000 relationship managed firms. It expresses concern that firms are not always achieving an adequate level of protection for client money and assets.Please click here to read the Dear CEO letter. The Dear CEO refers to the findings from visits to a range of investment firms and insurance brokers during the past nine months and highlights the priority areas where the FSA expects to be focusing its resources and to see improvements in practice in the coming year.  These findings and priority areas are set out in the FSA’s Client Money and Asset report, which accompanies the Dear CEO letter.

Please click here to read the Client Money and Asset report.

Weak areas discovered include: poor management oversight and control; lack of establishment of trust status for segregated accounts; unclear arrangements for the segregation and diversification of client money; and incomplete or inaccurate records, accounts and reconciliations

Poor practice at insurance brokers was found to include: 

  • Unclear allocation of duties by senior management leading to confusion between staff or a lack of accountability.
  • Client money processes had in some cases been delegated too far, leading to a lack of senior level responsibility and accountability.
  • Inconsistencies between Terms or Business Arrangements and client money calculations.
  • Review and sign-off processes surrounding client money calculations and reconciliations were not always evidence.
  • In some firms there was insufficient due diligence to assess client money risks arising from an acquisition.
  • Issues around the segregation of client money.  While the FSA allows non-statutory trust bank accounts to be used to extend credit for funding insurers’ and clients’ normal insurance transactions, client money was found to be used for other purposes too.
  • Unallocated cash and legacy balances were not being reduced promptly enough
  • Firms over-relied on CASS audit reports rather than perform their own assurance checks.

Section three of the report sets out further work that the FSA intends to carry out in relation to CASS.  The regulator will continue to carry out visits to firms during 2010 and has promised regulatory intervention where it finds compliance failings.  It will also produce a report on the findings from these visits in 2010 and a number of consultations in regard to changing provisions within CASS.

The letter requires members to read the report and consider its relevance for their business. Members must also confirm to the FSA that they have properly considered the report and that they are in compliance with its obligations to protect client money and assets.

 

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