Editor's comment: Client money needs reviewing

If the profession was expecting a quiet year after the difficulties of 2009 then it can think again. Already, we have seen Lord Jackson's review recommending the ending of referral fees in personal injury cases and Zurich announcing an increase of 20% in rates on personal motor; meanwhile, the Financial Services Authority has sent a Dear CEO letter with access to a report about client money to both insurance brokers and investment firms. In addition to the letter and report, the FSA has fined directors (see p.9), frozen assets, banned several brokers from using appointed representatives and closed some firms altogether. Worryingly, it notes compliance with the FSA's Client Assets Sourcebook as poor.

The regulator has found evidence that some client money processes have become too complicated, are delegated too far away from senior management and are inconsistent between terms of business arrangements and client money calculations. Senior management is cited time and again in the FSA's report. The current regulatory regime has been around for years and client money has always been a sensitive area; with support from trade associations and compliance firms available, there is no excuse for complacency. The FSA is focusing far more on senior management and corporate governance, describing its new approach as "more intrusive". If you are in any doubt about what is happening further down the management chain, make sure that you take action today because the watchdog will revisit this area again soon.

Professional campaign

As reported on page six, PB has launched a campaign with sister title Post - Investing in the Profession - to raise awareness and investment in professional standards. Scrutiny from the public on the financial services sector is at its greatest in decades, so now is the perfect time to enhance your firm's reputation as others suffer. We hope we can help you achieve this and welcome your comments and suggestions on the matter.