BDO warns investment and insurance firms to ensure they protect "client money" in current climate

Leading business adviser BDO LLP has today warned all FSA regulated investment firms and insurance intermediaries holding monies on behalf of clients to take all necessary steps to ensure that money they deposit with banks on behalf of their clients is safe if the bank were to fail.

Under the FSA’s “Principle 10”, all regulated firms must arrange adequate protection for client assets when it is responsible for them.  Such examples can include: brokers holding client money when buying or selling shares or insurance brokers who collect an insurance premium from consumers.

Fiona Raistrick, Head of the Financial Services Regulatory Practice, at BDO says:  “In these uncertain economic times, FSA regulated firms, such as investment companies and insurance intermediaries, will have a lot to worry about, however, the holding of client monies should not be allowed to slip down the agenda and be forgotten about.”

“If a bank was to fail, it is essential that consumers have the peace of mind that their money is safe, and regulated firms must ensure they exercise due skill, care and diligence when it comes to the handling of client monies,” she continues.

The FSA has not issued particular guidance as to how investment and insurance firms should negotiate this uncharted territory; however, “Principle 10” clearly states their current position.  It is anticipated that the FSA will not look kindly on firms who do not make attempts to protect client money, particularly as so many consumers look set to lose money with the collapse of the Icelandic banking system. 

“Given the increase in fines seen over the last three to six months, any company who does not make strong efforts to protect their clients could expect to face hefty fines from the FSA,” she concludes.

ENDS

For more information, please contact Dee Crooks at BDO on 020 7893 2761 / 07815 172 051 or email dee.crooks@bdo.co.uk

Notes to editors:

BDO’s Financial Services Group is the fastest growing sector in BDO and covers a number of areas including insurance, banking, funds, internal audit, regulatory issues, retail financial services and investment management.

BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO International is a world-wide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. The Belfast Firm is operated by a separate Partnership.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO is an award winning firm.  Recent achievements include:

• ''100 Best Companies to Work For' - The Sunday Times 2008
• Best Workplace UK' - Financial Times 2008
• 'Top 50 Where Women Want to Work' - The Times 2007
• 'Employer of the Year' - Accountancy Age Awards 2007
• 'Global Firm of the Year' - Accountancy Age Awards 2006