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IPRU-INV 2.4 BONDING REQUIREMENT FOR ACCOUNTANTS

IPRU-INV 2.4.1R

This section applies to a firm of accountants practising as such in the UK.

IPRU-INV 2.4.2R
  1. (1)

    If the aggregate value of client money and bonded investments a firm holds for a client is over £50,000 then the firm must ensure that it holds a bond for the excess over £50,000.

  2. (2)

    A firm must:

    1. (a)

      ensure that the bond is in the form prescribed by the FCA;

    2. (b)

      ensure that the person specified to act as trustee in the bond is a designated professional body or a solicitor practising as such in the UK;

    3. (c)

      ensure that the bond is lodged with the trustee; and

    4. (d)

      be able at all times to show that the amount of the bond is sufficient to meet the requirements of (1).

IPRU-INV 2.4.3R

A firm must notify the FCA immediately:

  1. (1)

    of any bond taken out specifying the amount and where it is lodged; and

  2. (2)

    of the arrangements it has made to comply with IPRU-INV 2.4.2R if a bond is not renewed or is cancelled.

IPRU-INV 2.4.4G
  1. (1)

    Firms which hold client money or bonded investments for more than one client, may hold one bond to cover all of the clients concerned. The bonding requirements may be complied with by taking out a global bond. In firms with numerous offices compliance may be achieved in practice by calculating the requirement based on figures supplied by offices which is likely to be at least quarterly. These figures would need to be supplied and assessed soon after the end of each quarter.

  2. (2)

    To ensure the global cover is sufficient, this approach would require an estimated safety margin to be incorporated, to allow for changes in the amounts of client money, investments or assets held. An additional prudent measure would be to ensure that exceptional amounts of these assets are notified by branch offices so that the firm can check whether the safety margin can absorb them and reconsider whether the total global bond cover remains sufficient.

IPRU-INV 2.4.5G

Firms which do not expect to hold bonded investments or client money in excess of the value limit need not hold a bond. However, firms may wish to make contingency arrangements with a surety whereby a bond facility is available and can be executed and delivered at short notice.