Investment Intermediaries Act, 1995
|
Bonding. |
51.—(1) Subject to subsection (5) of this section, each authorised investment business firm (other than a person who does not provide investment business services) shall hold a bond in a specified form to the value of £50,000 or, in years subsequent to the first accounting year, 25 per cent, of turnover by reference to the previous accounting year, whichever is the greater. | |
(2) The bond referred to in this section shall provide that in the event of the inability or failure of the authorised investment business firm to meet its financial obligations in relation to any sums of money received by it from, or on behalf of, its clients, a sum of money will become available to a person nominated or approved of by a supervisory authority to be applied for the benefit of any client of the authorised investment business firm who has incurred loss or liability because of the inability or failure of the authorised investment business firm to meet such financial obligations. | ||
(3) The person nominated or approved of by the supervisory authority shall, with the consent of the supervisory authority and up to such sum as may be specified by the supervisory authority, be indemnified out of the proceeds of the bond in respect of such reasonable expenses as are incurred in carrying out the functions provided for in subsection (2) of this section. | ||
(4) The person nominated or approved of by the supervisory authority shall keep all proper and usual accounts, including an income and expenditure account and balance sheet, of all moneys received by him on foot of a bond and of all disbursements made by him from any such moneys and of any amount in respect of the expenses referred to in subsection (3) of this section. | ||
(5) The Minister, following consultations with the supervisory authorities, may prescribe that— | ||
(a) arrangements in relation to the bond shall be entered into only with persons of a class or classes specified in the regulations, | ||
(b) the bond shall be in such form and valid for such minimum period as may be specified in the regulations, | ||
(c) a copy of the bond shall be displayed, for the information of the public, in a prominent position in all premises occupied by an authorised investment business firm and in which it carries on business as an authorised investment business firm, and the bond shall be mentioned in its sales literature and business note paper, | ||
(d) a requirement to enter into a bond shall not apply to classes of authorised investment business firms specified in the regulations or in respect of portions of the business thereof, and such regulations may have regard to the nature of the business of the authorised investment business firm, the creditworthiness or credit rating of the authorised investment business firm, the capitalization or solvency of the investment business firm and the existence of any relevant compensation scheme or guarantees, | ||
(e) in regard to authorised investment business firms which, because they are also insurance intermediaries, are required under Part IV of the Insurance Act, 1989 , to be bonded, a single bond may, subject to such conditions as are prescribed, apply to both investment business services and insurance business and that the requirement to be bonded under Part IV of the Insurance Act, 1989 , would thereby be met. | ||
(6) Any amount or percentage rate in subsection (1) of this section may be altered as trie Minister may from time to time prescribe and different amounts and percentages may be prescribed for different classes of authorised investment business firms by reference to turnover or to such other matters as the Minister may consider appropriate, and the Minister may specify a maximum amount for a bond. | ||
(7) For the purposes of this section— | ||
“accounting year” means the year commencing on a date prescribed by the Minister and subsequent anniversary accounting years and the Minister may prescribe different dates for different classes of investment business firm; | ||
“turnover” means the aggregate of all moneys required to be paid by an investment business firm into the bank accounts required under section 52 of this Act, together with the value of any investment instruments of clients coming into the control of the investment business firm, or where such accounts are not required under section 52 such amount as may be calculated in a manner specified by a supervisory authority. |