FSA Review of the Client Money Rules for Insurance Intermediaries
- On 28 August 2012, the United Kingdom's Financial Services Authority published a Consultation Paper with a view to amend the current CASS 5 rules, which regulates how insurance firms receive or hold client money in the course of their insurance business.
- With regards to insurance firms receiving money from Clients under Risk Transfer agreements, the FSA was concerned with the uncertainty and confusion that the current rule entails. The FSA therefore proposes the prohibition of conditional risk transfer so the applicable rules are clear and unequivocal.
- Another area of interest is the apparent conflict between CASS 5 and section 53 of the Marine Insurance Act 1996, which creates a debt obligation between the broker and the insurer. The FSA intends to make further amendments to CASS 5, if needed, depending on the outcome of the Law Commission's consultation on section 53.