Concern about Client Agreement regarding Cash

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1

Hi,

I was reading the Client Agreement and found on Article 12.7 this:

We may hold client money in a client bank account located in a jurisdiction outside the UK. The legal and regulatory regime applying to any such bank will be different from that of the UK and in the event of the insolvency or any other equivalent failure of that bank, your money may be treated differently from the treatment which would apply if the money was held with a bank in the UK.

I know that our cash is at Barclay’s UK. But this statement is clearly saying that it may be transferred outside this bank and even the country so we could loose our FSCS protection.

This raised a concern. May we know in which cases this event may happen? If it happens, is it because of T212 or Barclay’s?

Thank you.

2

The compensation scheme is applied on a company level, regardless of where the funds are currently stored. So even if we use a different bank (highly unlikely as we have no plans to change banks in the future) at some point, it will not affect in any way a client in the event of default, and the FSCS will cover both your funds and assets held on your Trading 212 account.

3

Thanks Tony.
So even if funds are transferred to a bank outside of the UK, the FSCS is still passporting?
So why this sentence your money may be treated differently doesn’t mean what you’re saying?

Thank you.

4

In terms of your funds being guaranteed by the FSCS, this sentence is not applicable, and you should not be concerned. It refers to a hypothetical situation where we decide to move client funds from an approved bank in the UK to a bank which does not qualify as “approved” which we don’t plan to do in the near future or for that matter at all. This sentence derives from the CASS rules relating to safekeeping of client assets and concerns holding of client money with a bank which is not an approved bank. This is only possible where all of the below conditions are met:

(1) the client money relates to one or more insurance transactions which are subject to the law or market practice of a jurisdiction outside the United Kingdom;

(2) because of the applicable law or market practice of that overseas jurisdiction, it is not possible to hold the client money in a client bank account with an approved bank;

(3) the firm keeps the money with such a bank for no longer than is necessary to effect the transactions;

(4) the firm notifies each relevant client and has, in relation to a consumer, a client agreement, or terms of business which adequately explain that:

(A) client money will not be held with an approved bank;

(B) in such circumstances, the legal and regulatory regime applying to the bank with which the client money is held will be different from that of the United Kingdom and, in the event of a failure of the bank, the client money may be treated differently from the treatment which would apply if the client money were held by an approved bank in the United Kingdom;

and C) if it is the case, the particular bank has not accepted that it has no right of set-off or counterclaim against money held in a client bank account, in respect of any sum owed on any other account

and (5) the client money is held in a designated bank account.

As outlined above, this is a hypothetical scenario, and we have no plans whatsoever of moving client money outside of the UK but even if we did, it will still be covered by the compensation scheme. :v:

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5

That’s perfectly fine for me.
Thanks Tony for your quick and appreciated support :slight_smile:

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