Chartered Accountants and Professional Business Advisers

FCA and Financial Services


We are now well into the new reporting regime which has caught some investment firms and all affected firms should now have filed their first returns.

If your firm needs any COREP assistance please feel free to get in contact with us as we have the necessary software in order to generate this return. We can also assist in calculating the figures to be submitted, as these are different to the old FSA003 returns.

An important point to note when filing COREP returns is that the figures should be shown in thousands, rather than whole numbers, despite guidance from the EBA which suggests the contrary!


A new Statement Of Recommended Practice (SORP) for investment funds has been released by the Investment Management Association (IMA). This includes new requirements for Alternative Investment Funds and makes some changes to the presentation of accounts.

The release of the new SORP in timed to coincide with the new FRS102 accounting standard in the UK. It will be mandatory for accounting periods beginning on or after 1 January 2015. Early adoption is permitted providing that FRS102 is applied at the same time.

A separate newsletter will cover the changes within the new SORP and this will be available on our website shortly.


A consultation paper (CP 14/6) has been released outlining the FCA's proposed changes to fees for the upcoming year. The fee blocks and amount allocated to each have changed with good news for broker dealers in block A.13 and less good news for fund managers who may see an increase.

Broker dealers last year were in the unusual position that if they held client money, they had a lower annual fee than their counterparts who didn't hold client money. This meant that theoretically a firm could apply to hold client money just for the purpose of reducing their FCA fees.

The FCA have now dealt with this anomaly, so that broker dealers holding client money will be in a new fee block to those who don't, and block A.13 (which contains broker dealers with no client assets) will see their fee tariff fall from £6.89 per £1,000 of income, to £2.77 per £1,000 of income.

Investment fund managers may see fee increases as the FCA look to increase the amount of money received from this group by 23.6% compared to last year.

The Financial Services Compensation Scheme (FSCS) Levy is likely to drop as the FCA have released a consultation paper (CP 14/1) on the Management Expenses Levy Limit, which shows a fall from £94.4m in 2013/14 to £80m in 2014/15. This should translate into lower FSCS levies in the year.

The fees are only in consultation paper form, but often remain unchanged in the final version.

CASS Rules

The FCA have clarified a number of rules within the Client Money and Asset (CASS) sourcebook. To summarise three main changes:

  1. Delivery Vs Payment - This applies to the exemption taken by some firms to not classify funds as 'client money' so long as they are passed on within the "DvP window". This is three working days, so no change to the existing rules, but clarity has been given on when the "window" starts.
  2. Unclaimed client money - Where reasonable attempts have been made to contact the owner of unclaimed client money, the firm can give the balance to charity. The firm must have made three attempts in writing to contact the owner of the funds, and these attempts must have been done at least 28 days apart. The exception to this is if the firm is aware the contact information is wrong, and has no other means of contacting their client.
  3. Client account reconciliations - These will have to be done daily regardless of the frequency of transactions within them. The FCA acknowledges that this may create a significant administrative burden for smaller firms, but the rules remain the same.

Dealing Commission Rules

These have now been clarified in a policy statement (PS 14/7) which gives more information on the interaction between dealing/soft commissions and corporate access. The rules are borne out of ensuring that customers receive the best deal, and are not charged for expenses which they should not have to pay.

In particular, investment managers should not pay for corporate access with dealing commissions, but the costs can be split between the investment manager and the customer where appropriate, providing that all other rules within the handbook are complied with.

COBS 11.6.3 has been rewritten to reflect the new clarified rules.


The Markets in Financial Instruments Directive (MiFID) legislation was introduced in 2007 and is currently in the process of being updated to a new version, MiFID II. This is being done in light of the financial crisis, and to cover changes within financial markets.

The new legislation won't apply until 2016 but there are draft versions of the text available from the European Council website. The majority of the changes are only likely to impact large institutions, but there will be some changes to conduct of business rules about disclosures brokers need to make to their customers.

In the News

The pay day loan provider Wonga has been ordered to pay £2.6m in compensation to customers for unfair debt collection practices. They were found to have sent letters to customers in arrears from non-existent law firms and in some instances added costs to customers’ accounts for the privilege.

Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered.

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