Context
Although perhaps of greater relevance to investment firms, the FCA has published a web page in relation to its expectations of firms selling client banks. A client bank is a name for a list of clients or accounts maintained by someone who provides financial services. It may include all clients the firm has worked with in the past and may include a right to income streams.
Key points to note and next actions
Client banks are an important part of a firm’s business, and in the FCA’s view form part of a firm’s assets. Firms may seek to sell or transfer client banks. The FCA accepts that they may be sold for legitimate reasons, e.g., to merge with another firm or so that an adviser can retire.
However, evidence has shown that in a small number of cases, firms have sold a client bank when they either knew they had redress liabilities or had failed to detect them. The FCA will act where these lists are being sold with redress liabilities.
In the web page the FCA sets out a number of expectations and its general approach to supervisory work in this regard, including an expectation for a firm intending to sell its client bank to notify the FCA via a SUP 15 notification where the sale could affect the firm’s risk profile, value or resources. The FCA also sets out examples of behaviours that could lead to regulatory action being taken.