The FSA has given London market brokers until 31 August to show they are compliant with client money rules.
The FSA has written a 'Dear CEO' letter to those supervised within its wholesale business unit. The letter requires brokers to confirm action has been taken to demonstrate compliance with regulations on firms' handling of client money, after the FSA found a large number of failures in the system and controls that are currently in place.
The FSA warned that in the most extreme instance, a firm had a deficit in its client money account of which it had not informed the FSA and which could not be rectified, leading to direct regulatory intervention.
It also pointed to a number of other issues that it had uncovered, including a general failure to ensure that the bank's acknowledgement of the trust status of the client money accounts conformed to the requirements of CASS 5.5.49R.
Brokers must also ensure that client money accounts are not in deficit and that they have the correct trust status by the 31 August deadline.
A copy of the letter will be published on the FSA website on 26 July.
