Mandates and collateral
Mandates and collateral

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Mandates and collateral
  • Mandates
  • Mandates defined
  • Mandate records and internal controls
  • Collateral

Where a client:

  1. gives a firm power to deal with his assets (without transferring ownership) under a mandate

  2. gives a firm an asset as a form of security to guarantee an obligation the client owes to the firm, ie provides the firm with an asset as collateral

the firm is not bound by the provisions in the client money rules or the custody rules. The rules relating to each situation are straightforward, and relate mainly to record keeping and ensuring the correct rights are exercised in relation to the assets.

Mandates

Where a firm controls the assets of a client, which are held in the client's own name, rather than holding those assets on trust, the client money rules and the custody rules do not apply. However, the firm must comply with the provisions in CASS 8 relating to the nature and scope of any mandate they have to control a client's assets. These provisions, which were significantly amended in June 2015, apply in relation to a firm conducting designated investment business (including MiFID business) and insurance mediation activity (excluding reinsurance contracts).

Mandates defined

A mandate is any means that gives a firm the ability to control a client's assets or liabilities:

  1. which are obtained by the firm from the client, and with the client's consent

  2. which, since 1 June 2015, can be