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FCA’s asset rules are 'significant' policy shift

11 June 2014


The UK regulator’s extensive changes to rules on client assets is expected to improve confidence in the local financial markets

Read more: FCA client asset rules UK

Market participants have dubbed the UK Financial Conduct Authority’s (FCA) new rules on regulation of client assets as a major policy move that will improve the protection of the UK financial markets.

The regulator unleashed an extensive overhaul of its rules on how money and assets of investment firms’ clients are held and protected.

"The FCA’s new policy statement on client assets marks the most significant policy shift in recent years," said Anne Simpson, partner in PwC’s Financial Services Risk and Regulation practice.

"Protecting clients’ money and assets remains a key priority for the FCA.  The FCA has undertaken a fundamental rethink of the regime, and the new rules should go a considerable way in enhancing confidence in UK financial markets."

The FCA is keen to avoid the problems investors experienced during the insolvency of Lehman Brothers and the failure of MF Global.
Simpson added: "As the failure of Lehman Brothers demonstrated, the current rules are not fit for the complexities of today’s financial markets. Auditors will play a stronger role in confirming that firms are complying with the FCA’s client asset rules."

The FCA also plans to do more work later this year on improving the speed of returning assets to customers when a firm becomes insolvent.

Firms that fall under the client asset rules need to act now to stay ahead of the game, according to James Steele-Perkins, director in PwC’s Financial Services Risk and Regulation practice.

"Although most rules will be subject to transitional arrangements, the hard work for FCA-regulated firms begins today. Some new rules come into effect July 1, with the rest becoming effective in December 2014 and June 2015. 

"The short timetable for implementation will put pressure on firms to assess the impact on their business and understand how their strategy and operations are affected by these significant changes."

 


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