Client money: Difference between revisions

{{a|cass|{{image|CASS Garb|png|A [[CASS operational oversight function|CASS officer]]’s ceremonial [[mithril]] gown, yesterday.}}

}}The [[FCA]]’s [[client money rules]] are designed to minimise credit exposure to firms which hold client funds, but who are not themselves regulated banks. Such firms must deposit client funds with an {{cassprov|approved bank}} which record the deposits in the firm’s name but belonging to the firm’s clients, so it is clear that the firm has no proprietary claim on the account.  Therefore, the [[client money]] account is isolated the firm’s creditors on the firm’s insolvency (such a failure a “[[primary pooling event]]”). It is not isolated, however, from the [[client money bank]]’s creditors.

===How is [[client money]] different to ordinary [[cash]]?===

It isn’t. [[Cash]] is [[cash]] is [[cash]]. “[[Client money]]” describes the relationship between the giver and the receiver of [[cash]], not the cash itself. The cash itself, as it moves around, is just [[cash]].  

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.''  

*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.'' 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.  

*Now this special case creates a [[Metaphysics|metaphysical]] problem, because when you look after something, you’re not meant to take ownership of it. You’re just a {{tag|custodian}}. But as noted above, you ''can’t'' “just look after” someone else’s cash.  

{{client money and banks}}

{{client money and cash brokerage}}