FSA highlights assets handling fear
The Financial Services Authority (FSA) has sent a letter and report to bosses of major insurance brokers and investment firms which hold clients' money or assets on behalf of clients drawing attention to the FSA's concerns over the handling of these funds.
It follows a letter in March last year, which explained the obligations a firm has to protect clients' money and assets and set out the FSA's intention to conduct further firm visits during 2009.
After the letter was sent, the FSA visited firms and found a number of failingswhich prompted the letter and the report highlighting some of the weaknesses discovered.
These included: poor management oversight and control; lack of establishment of trust status for segregated accounts; unclear arrangements for the segregation and diversification of clients' money; and incomplete or inaccurate records, accounts and reconciliations.
The FSA has already taken measures against a number of the firms that it visited, including referring two firms to enforcement, freezing a firm's assets and commissioning skilled persons reports.
Sally Dewar, managing director of risk, said: "The client asset rules are a key protection for consumers. It is simply unacceptable that firms are not ensuring that consumers get the appropriate protection. We have pointed out our concerns to firms and will be following up these concerns with further visits this year."
The report also includes examples of how firms should meet FSA expectations in relation to compliance with its requirements. Over the course of the year, the FSA will be increasing its visits to firms to assess how well these are being met.