ABI members balloted for comments on non-client money deed
Plans to create a specific trust account for brokers that do not handle client money took a step closer to fruition this week.
Biba regulation and compliance manager Steve White said a draft trust deed had been prepared by lawyers, which had been sent to the ABI for members' comments.
White said: "It has moved one or two steps forward. We need insurers to say yes collectively to the trust deed."
The need for a new trust account has arisen because the FSA's client money rules do not apply if a broker holds only risk transfer money. Brokers must therefore hold the money in non-FSA accounts, which may not protect the money.
Research by Biba has revealed that 24% of brokers hold only risk transfer money and as such need a properly constituted trust account for these monies.
White said the findings showed the importance of developing an appropriate trust account.
ABI head of market regulation Chris Hannant said he did not expect insurers to object to the proposal.
"On first look I don't see any major problems. Insurers have generally looked for [risk transfer] money to be protected in a trust account but have not specified the details of the account.
"As long as it [Biba's] trust account is properly constituted it should be something we are content with."
Hannant said a single trust account would mean brokers would not need to spend money creating their own.