In the light of the Lehman collapse, the FSA has been taking steps to improve client asset protection. On 20 October 2010 it published a policy statement giving details of some changes to the client assets regime which would take effect on a variety of dates in 2011.

These changes include:

  • the need for increased disclosure concerning re-hypothecation;
  • restrictions on placing client money deposits with another group member; and
  • prohibiting the use of general liens in custodian agreements.

The FSA also made it clear that a comprehensive review of the Client Assets manual would be necessary to ensure that it continued to provide the required degree of client protection and market certainty, but that this could only be undertaken following the final determination of the issues in the Lehman client money litigation – the Court of Appeal gave judgment in August, but there may be an appeal to the Supreme Court and potentially also to the European Court of Justice.

The full policy statement can be found here.