Introduction to Client Assets / Investor Money

Overview of the Client Asset Specialist Team ("CAST")

CAST was established in July 2012 following a recommendation in the 'Review of the Regulatory Regime for the Safeguarding of Client Assets' report. CAST has cross-sectoral ownership within the Central Bank for client asset and investor money risk. The primary role of CAST is to supervise and inspect client asset / investor money arrangements and monitor the risks to the safekeeping of client assets / investor money in relevant entities. CAST engages with supervised entities to ensure that client assets / investor money risks are being effectively manages at all times. It undertakes both routine client asset / investor money supervision and also carries out non-routine investigative work both on-site and off-site in respect of client assets / investor money risks.

Client Asset Requirements and Investor Money Requirements

On 2 January 2018, the Central Bank published the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017 (SI 604 of 2017). These Regulations integrate updated versions of the Client Asset Regulations 2015 (SI 104 of 2015) and Investor Money Regulations 2015 (SI 105 of 2015), and came into operation on 3 January 2018.

Client Assets

The protection of client assets is a key priority of the Central Bank of Ireland (the “Central Bank”). The purpose of the client asset regime is to safeguard client assets by ensuring investment firms adhere to general principles and prescriptive requirements in this regard. The objectives of the client asset regime are to:

(1) maintain public confidence in the client asset regime;

(2) minimise the risk of loss or misuse of client assets by investment firms; and

(3) in the event of the insolvency of an investment firm, enable the efficient and cost effective return of those client assets to clients.

Industry Letter - 20 April 2017

The Central Bank undertook a themed review during Q4 2016 – Q1 2017 to assess how investment firms, that are permitted to hold client assets, have implemented the client asset risk management requirements. The aim of the themed review was to evaluate how the role of the Head of Client Asset Oversight (the “HCAO”) is discharged and how the Client Asset Management Plan (the “CAMP”) has been developed and embedded within each of the inspected investment firms. The purpose of the industry letter is to provide feedback on the Central Bank’s findings and to highlight good practices.

Industry Letter - 20 April 2017 | pdf 483 KB

Investor money

The purpose of the investor money regime is to safeguard investor money by ensuring fund service providers adhere to general principles and prescriptive requirements in this regard. An investor money regime was introduced as it was recognized that there was an absence of clarity and certainty with regard to what protection is afforded to investor money, particularly money held during the processing of subscriptions and redemptions. The Central Bank considered this uncertainty an unacceptable risk to investor protection, particularly in the event of the insolvency of a fund service provider.

Reporting Obligations - Client Assets / Investor Money

Monthly Client Asset Reporting Obligations - Client Assets

A Monthly Client Asset Report ("MCAR") must be completed and submitted by relevant firms each month via the Central Bank's Online Reporting System ("ONR"). The purpose of the MCAR is to provide the Central Bank with an overview of the client asset position of each firm, enabling analysis of movements and trends in client assets.

The MCAR should be signed off and submitted within 20 business days of the end-date of the reporting period, and not before the period end-date. Further information on the MCAR can be found here.

Breach and Incident Reporting - Client Assets / Investor Money

Firms are required to inform the Central Bank of all reportable matters in relation to the Client Asset Requirements / Investor Money Requirements. Please use the reporting template for this purpose. Completed reports should be submitted to the Central Bank via the ONR.

The Central Bank published Guidelines on IMR Reporting Obligations for Fund Service Providers in June 2016.

Contact Details

For general queries on client asset / investor money matters, please contact the Central Bank's Client Asset Specialist Team by CAST@centralbank.ie.