Mon, Jun 30, 2014
PS14/9 – “Review of the client asset regime for investment business”
Who will this impact?
The paper impacts all Investment Firms which hold permission of safeguarding and administering client assets and/or client money and/or those who arrange the safeguarding and administering of client assets and/or client money.
When will this become relevant?
Overview
The FCA has recently published the policy statement PS14/9: Review of the client assets regime for investment business which contains the details on changes to the client money and custody assets regime for investment business. These changes were originally discussed in CP13/5 and have been the subject of significant debate and response to the FCA since publication.
Whilst the majority of the proposals made in the consultation paper published in July 2013 have been upheld, there are some significant alterations in certain areas. The policy statement acknowledges that some of the areas not carried forward at this time may be subject to a further consultation in due course.
There is evidence in the publication of compromise from the original proposals that has had the effect of reducing impact on firms as well as pushing back the implementation timeline. Furthermore, the intention of CP13/5 appears to have been achieved and has delivered a sensible outcome for both the regulator and those subject to the CASS rules.
Key highlights
Client money rules (CASS 7)
Custody reconciliations (CASS 6)
PS14/9 – “Client Money held in Individual Savings Accounts (ISAs)”
Who will this impact?
ISA managers who manage either stocks and shares ISAs, or cash ISAs and who hold, or wish to hold, the monies as client money.
When will this become relevant?
It is anticipated that the changes to the CASS rules that are proposed in CP14/9 will come into force alongside the new ISA rules on 1 July 2014. Feedback was requested on the consultation paper, to be received by 25 June 2014.
Overview
The FCA recently published CP14/9: Client Money held in Individual Savings Accounts which consults on making alterations to the CASS rules in response to the changes announced by the Government in March relating to the introduction of the New Individual Savings Accounts (NISAs).
NISAs will be introduced on 1 July 2014 and will mean that up to £15,000 cash can be placed into a stocks and shares ISA each year. This will allow clients to use stocks and shares ISAs for both deposit and investment purposes.
Change to the CASS rules is required to ensure that ISA managers do not need to separate client money from non-client money within the ISA wrapper.
The CP14/9 seeks to deal with three main areas:
The final bullet point is intended to avoid investment firms without deposit taking permission to be placed at a competitive disadvantage to those with deposit taking permissions that would not be bound by this new CASS rule.
In our opinion, the proposed changes to the CASS rules appear to be sensible in light of the changes announced by the Government. However, care needs to be taken to ensure that consumers understand the role of client money accounts, the role of the Financial Services Compensation Scheme and the appropriate protections surrounding their ISAs.
Upcoming Changes to CASS with FCA Publication of PS14/9 and CP14/9
30/06/2014
PS14/9 – “Review of the client asset regime for investment business”
Who will this impact?
The paper impacts all Investment Firms which hold permission of safeguarding and administering client assets and/or client money and/or those who arrange the safeguarding and administering of client assets and/or client money.
When will this become relevant?
Overview
The FCA has recently published the policy statement PS14/9: Review of the client assets regime for investment business which contains the details on changes to the client money and custody assets regime for investment business. These changes were originally discussed in CP13/5 and have been the subject of significant debate and response to the FCA since publication.
Whilst the majority of the proposals made in the consultation paper published in July 2013 have been upheld, there are some significant alterations in certain areas. The policy statement acknowledges that some of the areas not carried forward at this time may be subject to a further consultation in due course.
There is evidence in the publication of compromise from the original proposals that has had the effect of reducing impact on firms as well as pushing back the implementation timeline. Furthermore, the intention of CP13/5 appears to have been achieved and has delivered a sensible outcome for both the regulator and those subject to the CASS rules.
Key highlights
Client money rules (CASS 7)
PS14/9 – “Client Money held in Individual Savings Accounts (ISAs)”
Who will this impact?
ISA managers who manage either stocks and shares ISAs, or cash ISAs and who hold, or wish to hold, the monies as client money.
When will this become relevant?
It is anticipated that the changes to the CASS rules that are proposed in CP14/9 will come into force alongside the new ISA rules on 1 July 2014. Feedback was requested on the consultation paper, to be received by 25 June 2014.
Overview
The FCA recently published CP14/9: Client Money held in Individual Savings Accounts which consults on making alterations to the CASS rules in response to the changes announced by the Government in March relating to the introduction of the New Individual Savings Accounts (NISAs).
NISAs will be introduced on 1 July 2014 and will mean that up to £15,000 cash can be placed into a stocks and shares ISA each year. This will allow clients to use stocks and shares ISAs for both deposit and investment purposes.
Change to the CASS rules is required to ensure that ISA managers do not need to separate client money from non-client money within the ISA wrapper.
The CP14/9 seeks to deal with three main areas:
The final bullet point is intended to avoid investment firms without deposit taking permission to be placed at a competitive disadvantage to those with deposit taking permissions that would not be bound by this new CASS rule.
In our opinion, the proposed changes to the CASS rules appear to be sensible in light of the changes announced by the Government. However, care needs to be taken to ensure that consumers understand the role of client money accounts, the role of the Financial Services Compensation Scheme and the appropriate protections surrounding their ISAs.
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