Boring Business Question for Noger

[Gary G]

Nodge,

 

I know you work in the Insurance industry and I was hoping you might be able to help....

 

What do the new FSA rules mean to an insurance company when it comes to opening bank accounts? When I open accounts for insurance companies at present, I simply designate the account "IBA" (Insurance bank account) with agreement that we will not offset the monies etc etc.

 

Do the new FSA regs have any impact on this at all?

 

I've checked the FSA website, but it's all gobbledygook to me.

 

Thanks in advance!!

 

Gary

[Hibster.]

Crimson Permanent

 

Supercheese R250

[Violet Elizabeth]

Ooo, serious question !

 

I am working on the FSA regulations at the moment. Lots of rules I am afraid.

 

From what perspective are you asking, Broker or Insurer ?

 

Brokers must ask specific informed consent before any interest over £20 on client money can be retained, otherwise it has to be returned. etc etc

 

Can dig out the information on monday if you like, but on the FSA website it is all in the Prudential section. Although not the most readable thing.

[Steve-B]

Noger, YHM

 

Steve B

Big Black Beast^3 SV VHPD

USA 2005: How the West Was Driven

[Violet Elizabeth]

Steve, YHMT

[Steve-B]

Noger, YHR 😬

 

Steve B

Big Black Beast^3 SV VHPD

USA 2005: How the West Was Driven

[Gary G]

Nodge,

 

I work for a bank and will be opening an instant access account for a Broker. Previously I've designated it IBA and agreed not to offset the monies in that account against any other debts etc.

 

The Broker has asked what impact the new FSA regs will have on this. I don't think there will be any change, but just wanted to check.

 

I'll have a look in the Prudential section on the FSA site, but your views would be greatly appreciated!

 

Thanks,

 

Gary

[Violet Elizabeth]

Hmmm, what a cheeky Broker ! Can't see that it is a banks responsibility to recommend how a Broker complies (or not) with the FSA.

 

The Prudential sourcebook is a bit heavy, you could also look at the ICOB (Insurance Conduct of Business) sections too. It will be the "Client Money" rules that apply. There is a decent FAQ here too.

 

It will also depend on what sort of Broker they are, some rules only apply to Retail Private Business (i..e. our motor / home) like the interest one I mentioned. Most apply to Small Commercial as well.

 

However the Fiduciary requirements apply to everything including Reinsurance (which pretty much gets off scott free otherwise in the regs).

 

They should try to get hold of the Client Asset Soucebook (CASS) which should tell them everything. In fact, very seriously, they should be doing something about the FSA NOW !

 

From a banks point of view, there are no special "accounts" to set up. A current or deposit account is fine. The Broker needs to decide whether to set up a statutory trust, or non-statutory trust account. Basically the idea being that should the Broker go belly up, then the clients money is not touchable by the Liquidators. Setting up a non-statutory trust could be considered advantagoes, BUT its management is fairly onerous.

 

However, the main touch point between bank and Broker is the initla set up ;-

 

"When an intermediary opens a client bank account, CASS 5.5.49R (1) to (2) require the firm to give written notice to the bank requesting the bank to acknowledge two facts to it in writing:

 

(1) It must acknowledge that all money standing to the credit of the account is held by the intermediary as trustee (or if relevant in Scotland, as agent) and that the bank is not entitled to combine the account with any other account or to exercise any right of set-off or counterclaim against money in that account for any sum owed to it on any other account of the intermediary.

 

(2) It must also acknowledge that the title of the account sufficiently distinguishes that account from any account containing money that belongs to the intermediary, and is in the form requested by the firm e.g. it could be titled"XYZ insurance brokers statutory trust client account" or "XYZ insurance brokers non-statutory trust client account". "

 

Sounds like you are already on top of 1) with not netting off, and 2) is fairly simple.

 

The rest is down to the Broker. Again, they really need to sort this stuff out for themselves, the regulations are absolutely HUGE and even a large brokers like where I am now, are having a hard time sorting everything out (particuarly as the FSA keep changing their minds !).

 

Hope that helps.

 

p.s. usual caveats apply, I am neither a lawyer nor an accountant, nor a spotted dog.

 

 

 

 

 

Edited by - Noger on 24 May 2004 11:40:57

[Gary G]

Thanks very much Nodge!! Looks like I have got most of it covered. I'll advise the broker to talk directly with the FSA if he has concerns, since most of the regs don't affect me opening an account for him.

 

Thanks for taking the time to cover it all for me!

 

Cheers,

 

Gary