FCA consults on dormant assets rule changes

FCA is consulting on changes to its rules to reflect the further expansion of the Dormant Assets Scheme. Its rules facilitating the first phase of expansion, covering insurance, pensions and securities assets, took effect from 1 August 2022. The next set of changes will bring authorised funds and client money within the scheme.  For authorised funds, investments in the relevant collective investment scheme can become “investment assets” in certain scenarios where the AFM or depositary will have been holding a cash asset which eventually becomes dormant, or where a registered holding becomes dormant.

For client money, CASS 7 currently allows investment firms holding client money to pay away unclaimed client money to charity provided they take certain steps before doing so. Firms will now have the option (but will not be obliged) to transfer unclaimed client money into the Dormant Assets Scheme, provided it meets the dormancy conditions. It also proposes to allow firms to transfer other unwanted assets, once the law permits.

The consultation also includes a proposal to enable persons entitled to certain dormant investment assets or client money to refer complaints about the dormant asset fund operator to FOS, but FOS does not plan to expand the Voluntary Jurisdiction to cover complaints against dormant asset fund operators relating to dealing with unwanted asset money. FCA also proposed to remove obligations relating to dormant fund asset operators from the FSCS.

FCA asks for comments by 10 July on the proposed changes to the Glossary, FEES, CASS, DISP and COLL.

Emma Radmore