Overview

In this briefing, Bakers & McKenzie consider the particular risks to the preservation of client money and assets and explain the main differences between the Special Administration Regime and an ordinary insolvency administration regime. The SAR has been introduced to address the difficulties identified in the Lehmans collapse and to ensure that the return of client money and assets is appropriately prioritised. Key aspects of the SAR include:

● Special Administration Objectives which prioritise the return of client money and assets.

● A power given to the FSA to give directions to the Special Administrators in connection with the application of the Special Administration Objectives.

● New insolvency rules giving clients an enhanced voice in the administration process.

Bakers & McKenzie recap the FSA investment rules on client money and assets and summarises the Special Administration Regime's principle features. Lastly, the briefing sets out key issues relating to client money and asset protection that investors need to consider before entrusting client money and assets to an investment firm.

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