A question about the withdrawal of commission from client money accounts
Question: "My question concerns the client money account and withdrawal of commission. We must withdraw commission within 25 days of the date on which amounts became due and payable to the firm. This would seem to be unwieldy and possibly unworkable. Are you able to comment and give any guidance on this subject?"
Answer: "When you look at the rules in this area they show up the fact that some of them may well prove impractical in application. The rules on mixed remittances [CASS 5.5.16] do require that money that is not client money is withdrawn from the client money accounts no later than 25 business days after the day on which the remittance is cleared. This might cover cases where a client pays both premiums and fees with one remittance.
As a separate but linked rule, commission may only be drawn from the client money account if the firm has received the premium from the client and the insurer's terms of business are met. That commission must then be withdrawn within 25 business days of becoming due.
These rules do require the withdrawal to be made as soon as reasonably practicable, but then allow a period of up to some five weeks in all. That should be adequate to carry out the necessary procedures and intermediaries must ensure these are in place prior to January 2005."
