The Financial Conduct Authority (FCA), which has identified regular shortcomings concerning general insurance intermediaries’ client money arrangements, is reminding companies of their responsibilities and the implications of non-compliance.
“Firms holding client money are accountable for ensuring they understand the related regulatory requirements,” wrote the regulator in a new ‘Dear CEO’ letter to general insurance intermediaries.
“Principle 10 of the FCA’s Principles for Business states a firm must organize adequate protection for clients’ assets when it is responsible for them. Furthermore, Principle 3 requires firms to take reasonable care to organise and manage their affairs responsibly and effectively.”
In the correspondence, the watchdog said organisations should constantly review their client money arrangements and rules compliance. It was stressed that firms are expected to take strong action if needed to make sure that client money is properly safeguarded. Accordingly, senior management is expected to have appropriate oversight.
Warning from the FCA
The regulator warned: “We take failure to comply with the Principles for Business and the client money rules seriously.
“Where it appears that firms may be contravening or not meeting our standards, we may use our powers under Part 4A of FSMA (Financial Services and Markets Act 2000) to vary a firm’s permission, impose requirements, or change individuals’ approvals on our own initiative.”
In its letter, the FCA defined the key issues and its corresponding expectations in the areas of client money calculation; appropriate withdrawal of commission; client money bank accounts and acknowledgement letters; segregation of client money; co-mingling risk transfer money with client money; and client money audit.
“We will continue to assess firms’ client money arrangements in line with our supervisory strategies for general insurance intermediaries,” said the watchdog. “Where we find that firms are not meeting their obligations under our rules, we will take appropriate action…”
How Valsen Can Help
The experienced staff of Valsen Fiduciaries Group our global network allow us to provide high-quality services in several jurisdictions. We are at your disposal to help you further clarify, understand and abide to FCA rules and regulations. Please contact us through [email protected] or +248 2 525 217