INMA 5.8.2 Firms must notify customers of certain matters
(1) Before, or as soon as reasonably practicable after, an investment business firm receives client money from a customer, the firm must notify the customer about the following matters:
(a) that the money:
(i) will be held by the firm, as trustee, on the terms of the client money protection rules; and
(ii) will be segregated from money belonging to the firm;
(b) that, in case of failure of the firm, the money will be subject to the client money distribution rules;
(c) whether interest on the money is payable to the customer and, if so, the terms and frequency of the payments;
(d) that, despite the client money protection rules, the customer may be taking an unsecured credit risk on:
(i) the eligible bank into which the money is paid; or
(ii) any eligible third party to whom the money is paid; and
Note In relation to the priority ranking after a firm-related distribution event — see rule 5.10.4.
(e) if the firm intends to pay the money into a client bank account with an eligible bank that is in the same corporate group as the firm or maintained by an eligible third party that is in the same group as the firm:
(i) a statement of that fact; and
(ii) the name of the bank or third party.
Note Corporate group is defined in the glossary.
(2) If the firm intends to pay the money into a client bank account outside the QFC, the firm:
(a) must obtain the customer's consent; or
(b) must notify the customer in writing:
(i) that client money might be paid into a client bank account outside the QFC;
(ii) that the legal, insolvency and regulatory regimes that apply to the account may be different from those that would apply to it in the QFC; and
(iii) that if the bank were to fail the money might be treated differently from how it would have been treated in the QFC;
and must include in the notification an adequate explanation of the implications of holding money outside the QFC.
|Derived from QFCRA RM/2014-4 (as from 1st January 2015).|