• INMA Division 5.10.C INMA Division 5.10.C Third-party-related distribution events

    • INMA 5.10.6 Firms' continuing fiduciary duties

      An investment business 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 selecting the eligible bank or eligible third party concerned, and in subsequently monitoring the bank or third party; and
      (b) complied with its other fiduciary duties.
      Note Third-party-related distribution event, client money, eligible bank and eligible third party are defined in the glossary.

      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 5.10.7 Firms may make good deficit

      (1) If an investment business firm is not responsible for a deficit in client money that arose as a result of, or in connection with, a third-party-related distribution event, rule 5.10.6 does not prevent the firm from choosing to make good the deficit.
      (2) If the firm chooses not to make good the deficit:
      (a) the deficit must be borne by customers who have valid claims against the firm for client money owed to them by the firm, in proportion to the respective value of their claims; and
      (b) the firm must promptly notify each affected customer in writing of the amount of the deficit and the customer's share in it.
      (3) As soon as is practicable after the deficit is known, the firm must make and retain a record of each customer's share in the deficit.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).

    • INMA 5.10.8 Client money received after third-party-related distribution event

      (1) If an investment business firm receives client money after a third-party-related distribution event, the firm must not pay the money to the eligible bank or eligible third party that suffered the event unless the customer concerned gives written instructions after the event to pay the money to the bank or third party to meet an obligation to the bank or third party.
      (2) If the firm does not receive any such instructions, it must pay the money into a client bank account, opened after the event, with another eligible bank or eligible third party.
      Derived from QFCRA RM/2014-4 (as from 1st January 2015).