Client money worries
Q. If my firm get a FSA themed visit, I am concerned we might have a problem with the money rules. I am not sure where to start, any suggestions?
Recently, many of the questions to this column have surrounded compliance with the money rules, so it is clearly an area of concern. Your question is very general but a check on the FSA website will show you that enforcement is starting to bite.
In particular, the FSA will come down hard on the principals of firms that fail to manage client money properly. No names mentioned but take a look at the FSA website and the levels of fines and the prohibition of directors, which effectively stops them from holding a senior position within the industry.
We are not just talking here about deliberate attempts to defraud, which of course deserve to be hit hard. The money rules are designed to protect the public's money, and if they are not managed correctly a firm could find that the trust status could be challenged by prospective creditors in the event of business failure.
The FSA did publish a guide to the money rules in May that may help. The link is http://www.fsa.gov.uk/pubs/other/Client_Money_Guide.pdf. If that still does not give you sufficient guidance, then you may need some outside help.
If so, do it in good time, rather than as a knee-jerk reaction to an impending regulatory visit.
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