Client Money FAQs

Questions

1. Is Paymentshield an insurer or an insurance intermediary?
2. Does Paymentshield hold client money?
3. How does Paymentshield treat money received through its insurance mediation activities?
4. Are any funds co-mingled?
5. Do you have an explanation of your key terms regarding client money?

Answers

1. Is Paymentshield an insurer or an insurance intermediary?
Paymentshield acts as the administrator for the insurance policies on behalf of separate underwriters, this is commonly referred to as 'white-labelling'. Therefore, for the purposes of the Client Money rules, Paymentshield is an (insurance) intermediary.

2. Does Paymentshield hold client money?
As Paymentshield has the requisite 'risk transfer' agreements with the insurers, in accordance with the rules set out in CASS, Paymentshield is not deemed to be holding client money.

3. How does Paymentshield treat money received through its insurance mediation activities?
The FSA's client money rules provide Paymentshield with two options regarding the handling of money received from, or held on behalf of, customers during the course of its insurance mediation activities:

1. Risk Transfer - Paymentshield may hold and control money as an agent of an insurer under a written agreement with that insurer which is compliant with the FSA rules. In this situation, Paymentshield is not deemed to be holding client money; or
2. Hold Client Money - If no risk transfer agreement is in place, Paymentshield would be deemed to be holding client money. In such a situation, it must segregate the money from its own funds by transferring it to a client bank account held under statutory or non-statutory trust.

Paymentshield does not treat any money received during the course of its insurance mediation activities as client money, as it has the requisite 'risk transfer' agreements with the insurers on behalf of which it acts.

4. Are any funds co-mingled?
Paymentshield does not treat any money received during the course of its insurance mediation activities as client money. Paymentshield does not mix money held as agent of an insurer with client money held in statutory or non-statutory trust client bank accounts. Therefore, 'Co-mingling' is not relevant to our activities.

5. Do you have an explanation of the FSA's key terms regarding client money?

Term	Meaning
CASS	The section in the FSA rulebook ('the Handbook') which deals with 'Client Assets'.
Client	A person with whom a firm conducts or intends to conduct insurance mediation activities.
Client Money	Money that a firm holds on behalf of a client in the course of carrying on insurance mediation activities. This includes money that a firm treats as client money in line with the FSA client money rules in CASS. It includes premiums, claims money and premiums refunds.
Co-mingling	Mixing money held as agent of an insurer with client money held in a statutory or non-statutory trust client bank account.
Insurance mediation activities	Any of the following regulated activities: Dealing as agent in contracts of insurance; Arranging (bringing about) deals in contracts of insurance; Making arrangements with a view to transactions in contracts of insurance; Assisting in the administration and performance of contracts of insurance; Advising on contracts of insurance; Agreeing to carry on any of the above activities. [Note: Paymentshield has permission from the FSA to carry on all the above activities]
Money	Any form of money including cheques and other payable orders.
Risk Transfer	Where a firm holds and controls money as an agent of an insurer, and there is a written agreement in place which is compliant with the rules contained in CASS, the firm transfers the risk of holding and controlling the money to that insurer. In this situation, the firm is not deemed to be holding client money.

This page is intended solely for the attention of Directly Authorised or Exempt Firms as defined by the Financial Services Authority.