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Client money: Difference between revisions
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{{a|glossary|}}{{a|cass|}} | {{a|glossary|}}{{a|cass|}} | ||
===[[Client money]] generally=== | ===[[Client money]] generally=== | ||
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]]. | 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]]. | ||
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*As between the local bank and the [[intermediary]] who is acting as trustee for the [[broker]] (who in turn is acting as [[trustee]] for the client) it is [[indebtedness]] | *As between the local bank and the [[intermediary]] who is acting as trustee for the [[broker]] (who in turn is acting as [[trustee]] for the client) it is [[indebtedness]] | ||
*In the local bank’s hands it is [[working capital]]. | *In the local bank’s hands it is [[working capital]]. | ||
===When do client money obligations arise?=== | ===When do client money obligations arise?=== | ||
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.'' | ||