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Client Assets
Key Information Document
Bank of Ireland Private Banking
October 2015
The Central Bank of Ireland (‘CBI’) published new client asset regulations
in 2015 to strengthen the safeguards around client assets. These
are known as the Client Asset Regulations (S.I. No 104 of 2015)1 (the
“Regulations”). Where Bank of Ireland Private Banking Limited (‘BOIPBL’)
holds client assets, we will do so in accordance with the Regulations.
The CBI also published Guidance2 to assist firms in interpreting the
regulations. Clients may access the Regulations and Guidance on the
Client Assets section of the CBI’s website: http://www.centralbank.ie/
regulation/clientassetsandinvestormoney/client%20asset%20regulations/
Pages/default.aspx
The Regulations require firms to establish and document appropriate
arrangements to safeguard their clients’ assets to minimise the risk of loss
or misuse while a firm is a going concern, and safeguard clients’ rights to
their assets if a firm becomes insolvent or is exiting the market.
The Regulations are based on seven key client asset principles which
require that:
(i) client assets are held separate from the firm’s own assets;
(ii) client assets are clearly identified as such in the firm’s records and in
the records of relevant third parties;
(iii) client asset accounts are reconciled regularly;
(iv) the firm holds sufficient funds in its client asset accounts to cover
amounts owed to clients;
(v) clients are provided with information about how and where client
assets are held;
(vi) systems and controls are in place to identify and mitigate client asset
risks and
(vii)an external auditor reports annually on the firm’s safeguarding of
client assets. It is important to note that while the purpose of the
client asset regime is to regulate and safeguard the handling of client
assets, it can never fully eliminate all risks relating to client assets,
e.g. fraud, negligence.
Client assets, for the purpose of the Regulations, are assets of the
investor, which are held by BOIPBL on behalf of the client and for
their benefit. There are two forms of client asset - funds and financial/
investment instruments. Funds are defined in the Regulations and include
cash, cheques or other payable orders, current and deposit accounts
and margin collateral associated with client positions. Only client funds
relating to activities that are regulated financial services are considered
client funds for the purpose of the Regulations. Financial Instruments are
non-cash assets such as equities, bonds, securities, etc. The Regulations
govern the holding, rather than the valuation, of these client assets.
Not all assets given by investors to BOIPBL will be classified as client
assets. These include:
• Funds or financial instruments held directly by the client, e.g. a deposit
1 S
.I. No. 104 of 2015 Central
Bank (Supervision and
Enforcement) Act 2013 (Section
48(1)) Client Asset Regulations
2015 for Investment Firms
2 C
entral Bank of Ireland –
Guidance on Client Asset
Regulations for Investment Firms
account or units in an investment fund held in the client’s name.
• Assets received relating to unregulated activities, such as direct
property holding or property syndicates. Only assets related to
regulated activities are subject to the Regulations.
• Where a client sends a cheque or payment to BOIPBL, for the
purposes of investing in a product with another member of the Bank
of Ireland Group or a third party, and where the payment is made
ON E
payable to that other party and BOIPBL transmits the cheque or
payment to that party.
In addition, client assets will cease to be client assets:
• where BOIPBL pays / transfers the assets to the client directly or into
the client’s nominated account (e.g. client’s bank account).
• where BOIPBL pays / transfers the assets to a third party on the
client’s written instruction and where these are no longer under
BOIPBL’s control.
BOIPBL holds client funds with a bank and client financial instruments with
a custodian. The banks and the custodian selected will be Irish regulated
entities. BOIPBL carry out due diligence on the banks and custodians
to assess that they are capable of providing the services required and to
assess the risk of default. Factors in the assessment include
• the regulatory regime and jurisdiction in which they operate
• the financial stability and credit ratings of the organisation
• the operational capabilities of the organisation and the ability to
provide the services required
• their business continuity plans
• the risk governance structure.
TWO
Operation of Client Asset Accounts:
The establishment and operation of client asset accounts are subject
to the Regulations and as such, a number of safeguards are in place to
protect client assets. These arrangements, risks and safeguards include:
• Client assets are kept separate from the assets of BOIPBL and from
the assets of third parties.
• Client assets are maintained in clearly designated client asset
accounts. Only client assets are kept in these accounts. Client assets
are clearly identifiable in the records of BOIPBL and in the records of
third parties.
• Robust account opening arrangements are in place to ensure that
client asset accounts are set up correctly.
• Where BOIPBL transacts on client assets, it will only act in
accordance with the instructions and authority granted by the client
or as required by law or court order.
• All client assets are regularly reconciled by BOIPBL.
• Appropriate records are maintained in respect of the amounts held in
client asset accounts and ownership of same.
• A daily check is completed by BOIPBL to confirm it is holding sufficient
funds in its client asset accounts to cover amounts owed to clients.
• BOIPBL’s arrangements for the holding of client assets are subject to
an annual external audit review.
• In the event of failure of a bank, client funds deposited with the bank
will be exposed to the same risks as other depositors of the bank
and clients of BOIPBL may lose their funds.
• Client funds may be held in a client asset account with Bank of Ireland
which is a related party. As BOIPBL is a wholly owned subsidiary of
the Bank of Ireland Group, there is an increased risk that in the event
of a failure both BOIPBL and Bank of Ireland may be affected.
• The Deposit Guarantee Scheme may apply to client funds depending
on your individual circumstances and your other accounts with the
bank in which the client assets are held. For more information on the
Deposit Guarantee Scheme, please see http://www.centralbank.ie/
paycurr/paysys/dgs/pages/about.aspx
• BOIPBL is a member of the Investor Compensation Company and in
the event of failure of BOIPBL, the Investor Compensation Scheme
may apply to client financial instruments. For more information
on the Investor Compensation Scheme please see http://www.
investorcompensation.ie/
• In the event of failure of the custodian, client financial instruments
held with the custodian are ring fenced from creditors of the
custodian, but may not be accessible for a period of time and may be
subject to liquidation expenses.
• Appointed custodians of BOIPBL may use sub-custodians to hold
client assets and these assets may be held outside Ireland. In this
event the legal and regulatory regime applicable may be different to
that of Ireland and the rights of the client relating to the client’s assets
may differ accordingly. In the event of a default of a sub custodian, the
client assets may be treated differently from the position which would
apply if the Securities were held by an eligible custodian in Ireland.
The custodian and sub-custodians are not related parties of BOIPBL.
• Client financial instruments shall be held by BOIPBL in a client asset
account with a custodian. The custodian shall not exercise any right
TH R E E
of set-off or counterclaim against client financial instruments in the
client asset account in respect of any sum owed to it, except, to the
extent of any charges relating to the administration or safekeeping
of the client’s financial instruments or where the client has failed to
settle a transaction by its due settlement date.
• Where client financial instruments are not registered in the name
of the client, these shall be registered in the name of an eligible
nominee of the custodian or BOIPBL. Where an eligible nominee
is the registered holder of the client financial instruments, the client
remains the beneficial owner of these instruments. Client assets will
be registered in the name of an eligible nominee with the client’s prior
written consent.
• Where client assets are held in a pooled account, the assets will be
included with other clients’ assets which are separately identifiable
from the assets of BOIPBL. This means that client assets are held
as part of a common pool of assets, so clients do not have a claim
against a specific sum in a specific account; the client’s claim is
against the client asset pool in general. Client assets will not be held
in a pooled client asset account unless the client has given their prior
written consent.
• Client funds will be held in a non-interest bearing account, unless
advised otherwise.
If you would like further details on the operation of client asset accounts
please contact your relationship manager.
Bank of Ireland Private Banking Limited
PO Box 12478
40 Mespil Road, Dublin 4
+353 1 637 8600
Fax: +353 1 637 8631
Dockgate House, Dockgate, Galway
+353 91 566 301
Fax: +353 91 565 437
32 South Mall, Cork
+353 21 425 1527
Fax: +353 21 425 1539
www.privatebanking.ie
DISCLAIMER
Regulated Information: Incorporated in Ireland, registered number 41029.
Registered office: Bank of Ireland, 40 Mespil Road, Dublin 4.
Bank of Ireland Private Banking Limited (BOIPBL) believes any information
contained in this document to be accurate but BOIPBL does not warrant its
accuracy and accepts no responsibility whatsoever for any loss or damage caused
by any act or omission made as a result of the information contained in this
document. Any investment, trading or hedging decision of a party will be based on
their own judgement and not upon any view expressed by BOIPBL. Reference in
this document to specific securities should not be construed as a recommendation
to buy or sell these securities, but is included for the purposes of illustration only.
You should obtain independent professional advice before making any investment
decision. Any expression of opinion reflects current opinions of BOIPBL as at
October 2015. Any opinion expressed (including estimates and forecasts) may be
subject to change without notice. This publication is based on information available
as at October 2015. For private circulation only. Not to be reproduced in whole or in
part without prior permission.
Bank of Ireland Private Banking Limited is regulated by the Central Bank of Ireland.
Bank of Ireland Private Banking Limited is a member of Bank of Ireland Group.
RC088-15