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
Most Read Contributor in Ireland, October 2018

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
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions