A defence of the FSA’s policy; that custodians must be able to provide information on client assets in 48 hours in the case of the firm going bust – has been taken up by Ian Stott, client services director of the Consulting Consortium.
Stott said in a statement:?“Following the collapse of both Lehman Brothers and MF, the FSA made it clear in its consultation paper that the introduction of the CASS Resolution Pack (CASS RP) would be one step towards ensuring the speedier return of client assets in the event of ‘Firm’ failure.
“So now it’s landed in the form of an FSA Policy Statement PS12/6, it really shouldn’t come as any great surprise to in-scope firms holding permissions to handle client assets as custodians. But, as often seems to be the case, there will be outcry and comment from vociferous corners of the ‘custodian’ community claiming unfair treatment by the Regulator, especially in light of the 48 hour deadline that would be imposed in the event of a firm's failure or, at the specific request of the Regulator.??
“So what about effective systems and controls that should already be in place to protect and safeguard the financial interests of retail and wholesale customers … this isn’t an FSA ‘witch hunt’ but another sensible step towards improving client assets’ protection and increasing market confidence.
It still amazes me how the FSA signposts its intent through consultation papers and, rather than this being an industry wake-up-call, many potentially affected firms are caught unaware of their responsibilities until policy is mandated. So when the FSA says, ‘we do expect regulation in this area to become more focused on the effective segregation and rapid return of client assets’, guess what? Be prepared, and take positive action.” ??
