While IFAs mostly don’t have permissions to hold client money themselves, they will be advising clients on the use of fund groups and providers that do so.
The new rules announced last week force those who do hold client money to be more transparent and accountable. They will also go some way to protect all of us in the industry against future mis-selling claims. For once we are shutting the stable door before all the horses have bolted.
Recent failures and insolvencies in the industry have highlighted the issues and it has been clear there was a real need for the FCA to review the client money rules.
The changes have also been prompted, to a degree, by the merging of cash and stocks-and-shares Isas into Nisas. Importantly, client money and non-client money is treated differently for compensation purposes, so it is critical advisers can clearly demonstrate which falls under which protection umbrella.
In spite of signs of a sustained recovery, confidence in our financial markets is still fragile, so anything that can boost consumer confidence in UK investments has to be a good thing.
Carl Lamb is managing director at Almary Green