Financial Services (Investment Business (Client Assets)) (Jersey) Order 2001

Summary

This Order made under the Financial Services (Jersey) Law 1998 sets out detailed client asset protection rules that apply to persons registered to carry on investment business in Jersey. It covers how client money must be segregated and accounted for, how client property (investments and documents of title) must be safeguarded, and what happens to client money and property if a registered person defaults.

• Client money segregation: Registered persons must pay all client money into client bank accounts held with an approved bank, keep it separate from firm money and connected customers' money, and account for it properly (Part 2).
• Client bank account controls: Accounts must be opened and titled to distinguish client money, an undertaking must be obtained from the approved bank before the account is operated, and strict rules govern payments in and out, including notice requirements before withdrawing fees or commission.
• Reconciliation: Registered persons must reconcile client bank account balances against bank statements and client records at least monthly, within 10 business days, and correct discrepancies promptly or notify the Commission.
• Client property safekeeping: Rules govern registration of registrable investments, safekeeping by the registered person, its own nominee or an approved custodian, accounting and reconciliation of protected property, storage, and insurance (Part 3).
• Default and pooling: On a 'pooling event' (default), client money is held on statutory trust and distributed under prescribed pooling rules; the Commission may appoint a default officer to administer the process (Part 4).
• Record keeping: Records required under the Order must be retained for at least 10 years (Article 29).

The Order excludes banking business registrants from Part 2's client money provisions and allows the Commission to waive certain requirements in defined circumstances, subject to client disclosure of the resulting risks.

Key obligations

• Pay all client money received into a client bank account with an approved bank (Article 4(1))
• Keep client money, the registered person's own money, and connected customers' money segregated from one another (Article 4(2))
• Account properly and promptly for client money, including daily calculation of each client's credit balance and correction of any deficit (Article 5)
• Open one or more client bank accounts and obtain a bank undertaking (addressed to the registered person and the Commission) before operating the account, unless waived by the Commission (Article 6)
• Pay client money into a client bank account as soon as possible and no later than the next business day (Article 7(1))
• Only withdraw money from a client bank account in permitted circumstances, and give clients 14 days' notice before withdrawing fees or commission unless otherwise agreed (Article 8)
• Pay or disclose interest on client money as agreed with, or disclosed to, the client (Article 9)
• Reconcile client bank account balances and protected account totals at least monthly, completing reconciliation within 10 business days and correcting differences promptly (Article 10)
• Inform clients holding a designated account that it does not have the protection of Part 4 (Article 11(4))
• Not recommend or procure that anyone other than the registered person or an approved custodian act as registered holder or custodian of a client's investments (Article 13)
• Register registrable investments in the agreed name (or client's own name if none agreed) and distinguish client investments from the registered person's own (Article 14)
• Safeguard, account for and reconcile protected property in accordance with Part 3, including storage and insurance requirements (Articles 15 to 21)
• Provide the default officer with assistance required in the event of default (Article 28(2))
• Retain records required under the Order for at least 10 years (Article 29)

Applies to

registered persons carrying on investment business, approved banks, approved custodians, intermediaries

Deadlines

• next business day: Client money held or received must be paid into a client bank account as soon as possible and no later than the next business day, or paid to the client.
• 14 days' notice: A registered person must give clients 14 days' notice before withdrawing money from a client bank account for payment of the registered person's own fees or commission, unless other conditions are met.
• not less than once a month, within 10 business days: Reconciliation of client bank account balances and protected account totals must be performed at least monthly, within 10 business days of the date to which the reconciliation relates.
• at least 10 years: Records required to be kept under the Order must be retained for at least 10 years.

Related documents

• This document is made under Financial Services (Jersey) Law 1998
• Financial Services (Investment Business (Client Assets)) (Amendment No. 2) (Jersey) Order 2022 amends this document