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Financial Services: Insolvency

Question for Treasury

UIN HL7245, tabled on 24 April 2018

To ask Her Majesty's Government what is the legal basis that allows administrators of failed stockbroking firms to levy charges on clients' assets held by those firms.

Answered on

8 May 2018

The legal basis for the payment of administrators’ expenses from client assets is contained within rule 135 of the Investment Bank Special Administration Rules (England and Wales) 2011 (Statutory Instrument 2011/1301).

The Investment Bank Special Administration Rules apply to a broad range of businesses which hold client assets and are authorised to carry on a regulated activity which relates to the dealing, safeguarding or administration of investments as agent or principal, including stockbrokers.

Rule 135 sets out that client assets may be used only to pay the expenses which administrators have properly incurred as a result of the work undertaken to ensure that client assets are returned as quickly as possible. The rule also sets out the order of priority for payment of those expenses.

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