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New asset rules to protect against insolvency

Published on 30 Mar 2010 under category: legal

Clients will have better protection for their assets in case of insolvency, under new watchdog rules published today (March 30th).

The Financial Services Authority (FSA) has devised the rules following extensive research in the wake of the Lehman Brother International collapse.

Proposals in the consultation include increased reporting to clients, which could mean that firms will have to provide daily figures on the status of client money and asset holdings.

Credit group risk to such assets will be limited by the proposal to restrict the placement of deposits in client bank accounts to 20 per cent.

As part of the FSA's improvement of senior management standards, a senior individual within the firm should be made responsible for oversight and protection of client assets and money.

Paul Sharma, FSA director of prudential policy, said: "The financial crisis has been well documented and the publication of this consultation paper follows extensive work on our behalf since the collapse of Lehmans. We are keen to learn the lessons of the recent crisis and this paper is the first of many that we will publish on the subject of client money and assets.

"It outlines a number of areas where we believe the client assets sourcebook can be strengthened to ensure greater protection of client assets and financial stability as a whole."

If you require advice on Insolvency and Bankruptcy please call us on +44 (0)20 7831 0101 and ask for Katherine Sillett.