Ireland: Reminder For Investment Firms: Client Assets Key Information Document Required From 1 October 2015

Last Updated: 27 August 2015
Article by Robert Cain and Eoin O'Connor

Investment firms are required to issue a Client Assets Key Information Document to new retail clients from 1 October 2015 onwards, and to existing retail clients by 1 January 2016. This Briefing sets out further detail on this new obligation.

NEW CLIENT ASSET REGULATIONS

The new Client Asset Regulations1 (the 2015 Regulations) issued by the Central Bank of Ireland (the CBI) in March 2015 will come into operation on 1 October 2015, and will replace the existing Client Asset Requirements issued in November 2007 under the MiFID Regulations2 and the Investment Intermediaries Act 1995 (as amended, the IIA).

The CBI has also issued helpful Guidance for Investment Firms and an Industry Presentation on the 2015 Regulations. The 2015 Regulations apply to (a) MiFID investment firms, (b) investment business firms under the IIA, (c) UCITS management companies in respect of services conducted under Regulation 16(2) of the UCITS Regulations3, (d) alternative investment fund managers in respect of services conducted under Regulation 7(4) of the AIFMD Regulations4, and (e) each of the foregoing in respect of passported activities carried out by them from branches in other EEA countries.

NEW REQUIREMENT FOR A KEY INFORMATION DOCUMENT

Regulations 7(18)-(21) of the 2015 Regulations oblige firms, from 1 October 2015 onwards, to provide new retail clients (i.e. new clients who would be categorised as retail clients under the MiFID Regulations) with a Client Assets Key Information Document (CAKID) before those retail clients sign terms of business or investment agreements with those firms.

PAPERING EXISTING CLIENTS

In respect of existing clients who are retail clients on 1 October 2015, firms will have until 1 January 2016 to make a CAKID available to them. The CBI's Guidance confirms that the CAKID may be provided to existing clients via the firm's website (the ability to provide the CAKID for the first time via a firm's website applies only to papering existing clients and not to the provision of the CAKID to new clients).

HOW SHOULD THE CAKID BE PROVIDED?

The CAKID must be provided as a separate, stand-alone document in a durable medium. The firm's Client Asset Management Plan (CAMP)5 must document the medium to be used, and the firm must be able to demonstrate, on request, that it has provided the CAKID to its retail clients.

WHAT KEY PROVISIONS MUST THE CAKID INCLUDE?

  • The key features of the 2015 Regulations, and a reference to the Guidance, together with links to the 2015 Regulations and the Guidance on the CBI's website. The CAKID must also highlight that the client assets regime cannot fully eliminate all risks relating to client assets (such as fraud and negligence).
  • An explanation (using plain English to the extent possible) of what constitutes "client assets" under the 2015 Regulations. The firm should also clarify that the client assets regime does not relate to the value of a client's investment.
  • The circumstances in which the 2015 Regulations apply and do not apply. In particular, the CAKID should clarify when assets cease to be client assets, which financial instruments are subject to the client assets regime and which are not, and any unique circumstances in which the client assets regime will not apply.
  • The circumstances in which the firm will hold client assets itself, hold clients assets with a third party (such as an eligible credit institution or a custodian), and hold client assets in another jurisdiction. Where client assets will be held by a third party, the firm must clarify the regulations that the third party is subject to, any applicable risks or limitations, the basis on which that third party was selected, and whether it is related to the firm or independent of it. Where client assets will be held in another jurisdiction, the firm must confirm what investor compensation scheme applies.
  • The arrangements that apply to the holding of client assets, the risks associated with those arrangements, and controls in place to mitigate such risks.

HOW MUST THE CAKID BE PRESENTED?

The CAKID must be presented in a clear manner and must be easy for retail clients to understand. The CBI has, in particular, indicated that the CAKID should not contain unnecessary branding, or branding that detracts from the content of the document. Further, references to potential returns from investment products should not be included.

IS THERE A TEMPLATE?

No, the CBI has decided not to provide a CAKID template as it expects each firm to prepare a CAKID that reflects that firm's own particular business model and the services it offers to its retail clients.

ANNUAL REVIEW

A firm must review the contents of its CAKID annually to ensure that the information in the CAKID continues to be accurate and relevant. When issuing annual statements to retail clients, a firm must also include a notice that the CAKID is on its website.

CHANGES TO THE CAKID

If a firm makes material changes to its CAKID, it must inform retail clients, using a durable medium, about these changes within one month of making them. The firm must document, in its CAMP, how it will make that notification – however, the firm's website is not regarded as a durable medium for a change notification. It should also be noted that where the firm changes its CAKID, it need only notify the changes to its retail clients, and need not provide the complete CAKID to them (although it may, in fact, be easier to do so).

Footnotes

 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 S.I. No. 60 of 2007 – European Communities (Markets in Financial Instruments) Regulations 2007.

3 S.I. No 352 of 2011 – European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011.

4 S.I. No. 257 of 2013 – European Communities (Alternative Investment Fund Managers) Regulations 2013.

5 Investment firms are required, under Regulation 8(3) of the 2015 Regulations, to produce a client asset management plan by 1 January 2016.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.