Financial intermediaries conducting general insurance and protection business will now be able to hold both client money and other insurance assets in one single account, says the FSA.
Details of the latest guide for insurance intermediaries reveal the Financial Services Authority has reassessed its plans to require all client monies be held separately from an adviser firm’s “other” assets- as previously proposed in near final rules of September 2003.
Previous consultation with the industry suggested holding client monies and other assets (held as an insurance agent) in separate accounts would be too expensive for most firms, so the FSA has agreed firms can now hold client assets in one account – known as co-mingling - even though it was initially thought this would be in contravention of the Insurance Mediation Directive.
Advisers can hold assets in one account providing they have a written agreement in the terms of business with the relevant insurers, says the FSA.
That said, advisers will only be allowed to withdraw commission from the client bank account “when the premium is received as cleared funds in the account”.
Insurers will also have the right to demand intermediaries hold their assets in an account separate to client funds if they prefer, stipulates the FSA.
At the same time, the FSA has specified advisers must withdraw any assets from the client money account within 25 business days of remittance clearance if they are not classed as client monies.
Different rules will still apply to investment-led advisers, as they are still required to keep client money and any other assets in separate accounts.
Any adviser planning to conduct insurance or non-regulated protection business will need to be FSA authorised from January 15, 2005 in order to trade.IFAonline
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