PS18/2: Client money and unbreakable deposits

Show PS18/2 (PDF)[3]

Some investment firms are experiencing increasing difficulty depositing client money at banks. Industry feedback suggests that this is partly due to the combined effects of the liquidity rules applicable to banks and a rule in the Client Assets sourcebook (CASS) that prevents a firm from placing client money in bank accounts with unbreakable terms of longer than 30 days (30-Day Rule).

In our Consultation Paper (CP17/29[4]), we proposed changes to the 30-Day Rule designed to ensure consumers continue to be appropriately protected by firms holding their client money. This Policy Statement sets out our final amendments to the 30-Day Rule.

Who this applies to

This policy statement is relevant to or of interest to:

• regulated firms that hold client money in relation to investment business
• banks with whom firms deposit client money
• auditors who provide client assets audit reports

Next steps

The rules (set out in Appendix 1 of PS18/2) will come into force on 22 January 2018. The rules enable firms to hold a proportion of client money in an unbreakable deposit longer than 30 days, subject to certain conditions.