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3.5 Client Assets

As best practice, a PFP Operator should appoint an Eligible Custodian to safeguard Client Assets. However, alternative arrangements may be permitted by the FSRA where appropriate safeguards are implemented.

In the case that a PFP Operator does not appoint an Eligible Custodian, it must comply with:

(a) the higher capital requirements set out in Prudential – Investment, Insurance Intermediation and Banking (“PRU”) Chapter 3 and Section 4.3(f) of this Guidance; and
(b) where applicable, the following Conduct of Business (“COBS”) Rules:
(i) Chapter 14 – Client Money Rules (if holding or controlling Client Money, Providing Custody or Arranging Custody);
(ii) Chapter 15 – Safe Custody Rules (if holding or controlling Client Investments, Providing Custody or Arranging Custody); and
(iii) Chapter 16 – Recovery & Resolution Planning for Client Money & Safe Custody Assets (if holding Client Money or Client Investments).