Dear CEO | Release Date: 2nd July 2021
To read a longer summary of this Dear CEO letter, click here.
To access the original FCA document, click here.
Short Summary
The FCA has issued a reminder to CEOs of general insurance intermediaries about the crucial need for maintaining robust client money arrangements, as mandated by their regulatory responsibilities. Recent reviews and financial resilience surveys have revealed that some firms are at risk of failing to meet these obligations, suggesting potential widespread issues in the sector.
Key points from the letter include:
Compliance with Regulatory Requirements: Firms are reminded of their duties under Principle 10 to ensure adequate protection for client assets and under Principle 3 to organise and control affairs responsibly.
Regular Review and Compliance: Firms must regularly assess their adherence to the Client Asset Sourcebook (CASS) rules, especially those outlined in Chapter 5, and can refer to the FCA’s Guide to Client Money for additional guidance.
Proactive Adjustments Needed: The FCA expects firms to review their current client money arrangements in light of the highlighted issues and adjust practices accordingly to safeguard client funds effectively.
Firms are urged to discuss the contents of this letter with their boards or equivalent bodies to ensure understanding and action where necessary. Moreover, firms needing clarity on client money rules are encouraged to seek external advice. The FCA stresses that it will take action against non-compliance, which could include altering firm permissions or imposing fines.
Key take-away for affected readers:
Review and enhance your client money arrangements promptly. Ensure all practices align with FCA expectations to avoid potential enforcement actions. Regular board discussions and external consultations might be necessary to fully comply with the regulatory standards set by the FCA.