What sections should a TTCA policy include to comply with FCA client money rules?

Question from artemis, What sections should a TTCA policy include to comply with FCA client money rules?

Answer from AI:

A Title Transfer Collateral Arrangement (TTCA) policy must comply with the Financial Conduct Authority (FCA) client money rules in the UK. These rules are designed to protect client assets and ensure firms handle client money appropriately. Below are the key sections that a TTCA policy should include to ensure compliance:

1. Introduction and Purpose

This section should outline the purpose of the TTCA policy, including:

• The rationale for using TTCA.
• How it aligns with the firm’s overall risk management strategy.
• References to relevant FCA rules and regulations.

2. Definitions and Scope

Clearly define key terms and the scope of the policy:

• Definitions of “client money,” “TTCA,” and other relevant terms.
• The types of clients and transactions covered by the policy.

3. Client Consent and Disclosure

Ensure that clients are fully informed and have given explicit consent:

• Procedures for obtaining informed consent from clients.
• Details on how and when disclosures will be made to clients.
• Documentation requirements to evidence client consent.

4. Segregation and Reconciliation

Outline how client money will be segregated and reconciled:

• Procedures for segregating client money from the firm’s own funds.
• Regular reconciliation processes to ensure accuracy.
• Record-keeping requirements.

5. Risk Management and Controls

Describe the risk management framework and internal controls:

• Risk assessment procedures related to TTCA.
• Internal controls to monitor and manage risks.
• Regular review and audit processes.

6. Client Communication

Detail how the firm will communicate with clients regarding TTCA:

• Methods and frequency of communication.
• Information to be provided to clients, including risks and benefits.

7. Termination and Return of Collateral

Explain the procedures for terminating TTCA and returning collateral:

• Conditions under which TTCA can be terminated.
• Steps for returning collateral to clients.

8. Compliance and Monitoring

Ensure ongoing compliance with FCA rules:

• Regular monitoring and compliance checks.
• Reporting requirements to the FCA.
• Training programs for staff on TTCA and client money rules.

9. Record Keeping

Specify the record-keeping requirements:

• Types of records to be maintained.
• Duration for which records should be kept.

10. Review and Update of Policy

Outline the process for reviewing and updating the TTCA policy:

• Frequency of policy reviews.
• Procedures for updating the policy in response to regulatory changes.

Relevant FCA Rules and Regulations

For detailed information, refer to the following FCA resources:

• FCA Client Assets Sourcebook (CASS) 7A
• FCA Client Assets (CASS) webpage

Consult a Legal Professional

While this guide provides a general overview, it is crucial to consult with a legal professional to ensure that your TTCA policy is fully compliant with FCA rules and tailored to your specific circumstances. Legal advice is necessary to address any unique aspects of your business and to stay updated with any regulatory changes.