Brokers may face a cash crisis under new FSA client money rules. Debbie Clarke explains how to beat it
' With regulation effective from tomorrow the FSA will be expecting brokers to turn their words into deeds.
A particular area of concern is the segregation of accounts to protect customers' money. The FSA has said that brokers will be able to withdraw commission from client accounts, but only on a "received" basis.
This may leave brokers with a cash shortfall that will need addressing. There are a number of steps a broker can take to minimise the impact of this:
In many circumstances the total financial requirement of a broker will not be evident until it analyses each book of business to reveal its true debtor position. Providing both your bank and shareholders with this information early will minimise any unwelcome surprises.
These activities represent a level of business analysis that many brokers will be unfamiliar with, but now is the time for action.
' Debbie Clarke is director, corporate finance, at Mazars