Chartered Accountants and Professional Business Advisers

Financial Services

Client Money Asset Return

In the autumn of 2010 the FSA performed a review of the quality and consistency of auditor’s reports on client assets. The review identified a number of material findings and weaknesses in the reports and as a result the FSA proposed a number of amendments to the regulations aiming to improve the quality of the reports and to clarify the responsibility of the auditors as well as the responsibility of the firm for which the report is prepared. As a tool for improving the oversight and monitoring of investment firms client money and assets position the FSA will introduce a Client Money and Assets Return (CMAR). The Policy Statement to be completed and published later this month is expected to confirm the following new regulation to become effective on 1 June 2011.

Large and Medium Firms

Client Asset Sourcebook (CASS) large and medium firms will be required to submit the CMAR on GABRIEL on a monthly basis, providing data of their holdings of client money and assets for the month. The requirements will apply from 1 June 2011 and the CMAR has to be submitted within 15 business days of the month end. The first report has to be submitted for the month of June 2011.

Large Firms

CASS large firms are those whose highest total amount of client money held during the last calendar year exceeds £1 billion, or the highest total value of safe custody within the same period exceeded £100 billion.

Medium Firms

CASS medium firms are those whose highest total amount of client money held during the last calendar year was greater than £1million and less than or equal to £1 billion, or the highest total value of safe custody within the same period was greater than £10 million and less or equal to £100 billion.

Small Firms

CASS small firms will be required to provide half-yearly notification of their highest client money balance and highest safe custody value in the previous six months. The first report, due 15 days after the end of June 2011, will need to cover that month only.

Collective Investment Sourcebook

In February 2011 a number of amendments were made to the rules in chapter 7 of Collective Investment Sourcebook (COLL) with regards to the winding up or termination of Authorised Unit Trusts (AUTs) and Investment Companies with Variable Capital (ICVC).

Aligning AUTs with ICVCs

Some of these changes were made to align the rules for AUTs more closely with those for ICVCs and which were set out in this previous newsletter.
In addition the following amendments and clarifications to chapter 7 of COLL have been made or proposed:

In respect of ICVCs and AUTs, the fund manager must keep unit holders appropriately informed about the progress of the winding up or termination.

The trustee of an AUT must distribute the scheme property proportionally to the unit holders after making appropriate provisions for liabilities and wind up costs; and the AUT manager must ensure the final accounts are prepared and audited.

Winding up funds or sub funds

The following minimum conditions must be set out to determine when a winding up of a fund or a sub-fund is complete;

  • All liabilities have been paid and/or adequate provision have been made for liabilities including winding-up costs;
  • The scheme property has been realised or distributed;
  • The net proceeds has been distributed to unit holders in proportion to their respective rights or provision made in respect of final distribution.

Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above.  If you would like advice or further information, please speak to your usual Shipleys contact.

Need more help? Please contact us at or +44 (0)20 7312 0000