Thursday, 18 December 2014 11:28
'Administrators may be failing to be ready for new FCA rules'
Many third party administrators and distributors may not be adequately prepared for changes to the FCA rules on controlling clients assets, a firm has warned.
New CASS rules are being introduced in just over six months' time.
The FCA said it relies "greatly on the quality of the protections afforded by the client assets regime because they help to ensure that clients' assets and money are safe in the event of firms failing". The regulations will be altered from 1 June.
Weaknesses in firms' client asset systems and controls can cause "serious financial detriment to customers and counterparties, as well as reputational damage to the FCA and UK markets", the regulator said.
Altus Business Systems has expressed concerns that administrators and distributors could fail to be ready.
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In its recent policy statement PS 14/9, the FCA introduced the concept of the 'responsible third party'.
This increased the accountability of third party providers in producing data in a timely and efficient manner to administrators in order to allow them to conduct reconciliations within the requirements of the new rules.
The regulator has encouraged platforms and other administration firms to formally report third parties if delays with complying with the new changes are caused as a result of inadequate data systems or processes.
William Watling, product marketing director at Altus, said many platforms are therefore becoming increasingly conscious of costs as they are aware that they will still be responsible for all the associated costs involved with any issues in data reconciliations, even if they are able to prove that the fault lies with the third party provider.
He said although platforms will be initially accountable for these costs, once the breaks in question have been reconciled, the provider can then try to claim compensation for the costs incurred on behalf of the third party.
Under the new CASS rules, the time to do this is also reducing from 25 working days to 'monthly'. Mr Watling said there is now an increased pressure on platforms to ensure they are working as efficiently as possible with third party providers.
He said: "If third parties continue to cause delays because their systems aren't able to provide data electronically in a timely manner, then it is likely that many providers will invoke action for recompense in today's cost conscious environment.'
"The FCA has now not only encouraged platforms and other administration firms to point the finger if a third party hinders them from meeting the new CASS obligation starting on 1 June, but has now made it a requirement to report them for failing to comply with the new rules."
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New CASS rules are being introduced in just over six months' time.
The FCA said it relies "greatly on the quality of the protections afforded by the client assets regime because they help to ensure that clients' assets and money are safe in the event of firms failing". The regulations will be altered from 1 June.
Weaknesses in firms' client asset systems and controls can cause "serious financial detriment to customers and counterparties, as well as reputational damage to the FCA and UK markets", the regulator said.
Altus Business Systems has expressed concerns that administrators and distributors could fail to be ready.
{desktop}{/desktop}{mobile}{/mobile}
In its recent policy statement PS 14/9, the FCA introduced the concept of the 'responsible third party'.
This increased the accountability of third party providers in producing data in a timely and efficient manner to administrators in order to allow them to conduct reconciliations within the requirements of the new rules.
The regulator has encouraged platforms and other administration firms to formally report third parties if delays with complying with the new changes are caused as a result of inadequate data systems or processes.
William Watling, product marketing director at Altus, said many platforms are therefore becoming increasingly conscious of costs as they are aware that they will still be responsible for all the associated costs involved with any issues in data reconciliations, even if they are able to prove that the fault lies with the third party provider.
He said although platforms will be initially accountable for these costs, once the breaks in question have been reconciled, the provider can then try to claim compensation for the costs incurred on behalf of the third party.
Under the new CASS rules, the time to do this is also reducing from 25 working days to 'monthly'. Mr Watling said there is now an increased pressure on platforms to ensure they are working as efficiently as possible with third party providers.
He said: "If third parties continue to cause delays because their systems aren't able to provide data electronically in a timely manner, then it is likely that many providers will invoke action for recompense in today's cost conscious environment.'
"The FCA has now not only encouraged platforms and other administration firms to point the finger if a third party hinders them from meeting the new CASS obligation starting on 1 June, but has now made it a requirement to report them for failing to comply with the new rules."
Get FREE daily news summaries direct to your inbox. Sign up on the homepage now.Get FREE daily news summaries direct to your inbox. Sign up on the homepage now.
Follow us on Twitter and get frequent news alerts @FPM_online.
Or follow Editor Kevin O'Donnell - @FPM_Kevin or staff writer James Nadal - @FPM_James.
For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.
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