The Financial Conduct Authority (FCA) has confirmed (on 16 August 2016) that it will not proceed with its proposed client money rule changes for insurance intermediaries.
The previous consultation (CP12-20) set out far-reaching changes, including increased frequency of the client money calculation and stricter requirements around risk transfer, advancing credit and the use of ‘buffers’.
Following feedback and further consideration of the costs and benefits, the FCA has concluded it would not be proportionate to proceed with these changes. The FCA will not pursue any rule changes without a new consultation.
Jon Sperrin, Head of Financial Services Regulatory at Grant Thornton UK LLP, said:
“Firms will welcome this long-awaited confirmation from FCA that the proposed CASS 5A rules have been shelved. However, many of the key risks and potential areas of non-compliance still remain in the market, such as conditional risk transfer. So, despite this announcement, firms should not rest on their laurels.”
“The FCA remains highly active in the supervision of CASS compliance and we do not expect this trend to change in the short-medium term. Firms should also expect their annual client money audits to become more stringent in light of new requirements from the Financial Reporting Council.”