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Client money: Difference between revisions
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Generally, there are two reasons you might pay money to someone else: <br> | Generally, there are two reasons you might pay money to someone else: <br> | ||
'''The general case, where [[client money]] does not apply''': ''Because you owe it under a contract.'' | '''The general case, where [[client money]] does ''not'' apply''': ''Because you owe it under a contract.'' | ||
*In some cases (for example a {{tag|CSA}} or even a [[loan]]) the payee might in turn have to pay some money back to you at a later date. But you are exposed to the payee’s credit risk in the mean time: you are a '''creditor'''. | *In some cases (for example a {{tag|CSA}} or even a [[loan]]) the payee might in turn have to pay some money back to you at a later date. But you are exposed to the payee’s credit risk in the mean time: you are a '''creditor'''. | ||
*This general case does '''not''' involve [[client money]] (see {{tag|CASS}} {{Cassprov|7.11.25}}). | *This general case does '''not''' involve [[client money]] (see {{tag|CASS}} {{Cassprov|7.11.25}}). | ||
*You could say this is “title transfer” of [[cash]], but you don’t need to, because all delivery of cash it title transfer. There ''is'' no title to cash. <br> | *You could say this is “title transfer” of [[cash]], but you don’t need to, because all delivery of cash it title transfer. There ''is'' no title to cash. <br> | ||
'''The special case where [[client money]] might apply''': ''Because you want your counterparty to look after it for you, in connection with some other service — {{fcaprov|designated investment business}} for example (there are many others) — it is providing you.'' | '''The special case where [[client money]] ''might'' apply''': ''Because you want your counterparty to look after it for you, in connection with some other service — {{fcaprov|designated investment business}} for example (there are many others) — it is providing you.'' As to this, see CASS {{cassprov|7.10.1}}, the applicability of the client money rules. The key phrase is not “in connection with designated investment business”, but “money received for and on behalf of a client”. That implies an agency, trust or banking kind of role, and is quite different from “money ''owed'' to a client”, which implies an outright contractual obligation. Agency, trust and banking doesn’t happen all that often in connection with designated investment business — ''unless you are acting as an [[agent]], [[trustee]] or [[bank]]''. | ||
*Here, you don’t owe the payee anything. The only contract you have arises because it has agreed to look after your money for you. | *Here, you don’t owe the payee anything. The only contract you have arises because it has agreed to look after your money for you. | ||
*This special case is a sort of safekeeping: it is a regulated activity. In the UK it is regulated by the {{tag|FCA}} under the [[Client Asset Sourcebook]] (fondly known as the {{tag|CASS}} rules). | *This special case is a sort of safekeeping: it is a regulated activity. In the UK it is regulated by the {{tag|FCA}} under the [[Client Asset Sourcebook]] (fondly known as the {{tag|CASS}} rules). | ||