• IMEB Part 4.3 IMEB Part 4.3 Third party-related distribution event

    • IMEB 4.3.1 IMEB 4.3.1 Continuing fiduciary duties

      A firm is not responsible for any deficit in client money arising as a result of, or in connection with, a third party-related distribution event if the firm—

      (a) used appropriate skill, care and judgement in the selection of the eligible bank or eligible intermediary and its subsequent monitoring of the bank or intermediary; and
      (b) complied with its other fiduciary duties.
      Derived from QFCRA RM/2011-3 (as from 1st July 2011)

      • IMEB 4.3.1 Guidance

        A firm that has complied with its fiduciary duties is not required to make good any deficit. However, the firm may choose to do so in the interests of its relationship with clients (see rule 4.3.2).

        Note Third party-related distribution event, client money and eligible bank are defined in the glossary.

        Derived from QFCRA RM/2011-3 (as from 1st July 2011)

    • IMEB 4.3.2 Firms may make good deficit

      (1) A firm that, under rule 4.3.1, is not responsible for a deficit in client money arising as a result of, or in connection with, a third party-related distribution event may choose to make good the deficit.
      (2) If a firm chooses not to make good a deficit under subrule (1)—
      (a) the deficit must be borne by clients who have valid claims against the firm for money owed to them by the firm that is client money, in proportion to the respective value of their claims; and
      (b) the amount of the deficit must be promptly notified in writing to each affected client, together with the client's share in the deficit.
      (3) A firm must, as soon as is practicable after the deficit is known, make and keep records of each client's share in the deficit.

      Note For a firm's record keeping obligations, see chapter 8.
      Derived from QFCRA RM/2011-3 (as from 1st July 2011)

    • IMEB 4.3.3 Client money received after third party-related distribution event

      (1) Client money received by a firm after a third party-related distribution event must not be paid to the eligible bank, or transferred to the eligible intermediary, that suffered the third party-related distribution event unless the client gives written instructions after the occurrence of the event to pay the money to the eligible bank or to transfer the money to the eligible intermediary to meet the client's obligation to the bank or intermediary.
      (2) If the firm does not receive any instructions mentioned in subrule (1), the firm must pay the client money into a client bank account that was opened with another eligible bank after the third party-related distribution event.

      Note Third party-related distribution event, eligible bank and eligible intermediary are defined in the glossary.
      Derived from QFCRA RM/2011-3 (as from 1st July 2011)