The UK Financial Services Authority (FSA) has recently written to the chief executive officers of all firms handling client money and assets seeking a response before June 30:
- confirming that their controls over the handling of client money and assets have been reviewed by management;
- stating whether or not the firm is in compliance with its obligations respecting client money and assets; and
- identifying the person at the firm with overall responsibility for compliance with FSA’s client money and assets rules.
The letter follows up an FSA communication earlier this year that pointed out significant weaknesses and failings discovered during visits to firms carried out in late 2009. It also comes at the same time as several highly publicized disciplinary actions and fines imposed by the FSA on regulated firms for client money failings.
In addition, the FSA focused on this area in its Annual Report (see “FSA Annual Report Published,” above), in which it stated its concern that firms “were not always achieving an adequate level of client money protection, thereby potentially threatening market confidence in the UK financial services industry.” The FSA added that it had taken and would continue to take “various actions to address risk in this area. We have increased dedicated visits to firms, and have expanded, and continue to expand, the level of resource within the FSA dedicated to client money and assets supervision.”