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PwC: the FCA's 'most significant policy' to protect client assets
by Elsa Buchanan on Jun 10, 2014 at 13:52
PwC has welcomed the FCA's new rules on client money and custody assets in light of recent insolvencies.
The extensive and detailed changes include a rewrite of client money rules for investment firms and substantial amendments to custody rules in the client assets sourcebook (Cass).
The financial watchdog said the changes will improve systems and controls around segregation, record keeping and reconciliations and set out how investment firms must address client asset risks.
Anne Simpson, partner in PwC’s financial services risk and regulation practice, described the new policy statement as 'the most significant policy shift in recent years'.
'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,' she said, highlighting current rules are 'not fit for the complexities of today’s financial markets'.
PwC also applauded the stronger role expected to be played by auditors in confirming whether firms are complying with the FCA’s client asset rules. Additionally, it sees the FCA's plans to do more work later this year on improving the speed of returning assets to customers when a firm becomes insolvent as a positive step.
'Although most rules will be subject to transitional arrangements, the hard work for FCA regulated firms begins today,' said James Steele-Perkins, director in PwC’s financial services risk and regulation practice
'Some new rules come into effect 1 July, 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.'
The changes affect around 1,500 FCA-regulated firms that carry out investment business, from the largest investment banks to the smallest investment adviser, which collectively hold over £100 billion of client money and £10 trillion of custody assets.
The FCA move follows a series of fines in the industry over failures in custody and safeguarding of assets.
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