Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Client money definition

What does Client money mean? money held or received by a legal practice on behalf of a client, rather than for the firm’s own benefit. It typically includes transaction funds, litigation monies, disbursements and expenses held on account, advances for fees, and sums held as trustee or stakeholder. In practice, client money must be safeguarded, segregated in a client account, accurately recorded and reconciled, and applied, transferred or returned only for the client’s purposes or as required by law. It is generally treated as trust money, giving clients priority on the firm’s insolvency. The term is used across multiple legal and regulatory contexts...

UK FCA CASS 7 client money: scope, segregation, reconciliations, insolvency, MiFID II and Brexit changes, Dormant Assets, banking exemption, opt-outs, sub-pools, auditor duties and enforcement

Published by a LexisNexis Financial Services expert

Practice notes

Background to the client money rules

The framework setting out how a firm must protect and manage client money connected to its investment business appears in chapter 7 of the Clients Assets sourcebook (CASS 7), which is part of the Financial Conduct Authority’s (FCA) Handbook. These provisions expand on the FCA’s overarching obligation in Principle for Business 10 that 'a firm must arrange adequate protection for clients' assets when it is responsible for them'.

This Practice Note explains the scope of client money and the detailed requirements in CASS 7 for handling it, including where it must be paid, how it should be segregated, and the diligence expected regarding the entities with whom it is held:

What constitutes client money—and what does not
CASS 7 obligations to pay client money into particular accounts
The requirement to maintain segregation of those monies
Due diligence on the entities with whom the funds are placed

It does not address how client money is distributed if a firm becomes insolvent (a 'pooling event'). Those matters are governed by the rules in CASS 7A and are considered in Practice Note: Client money distribution and transfer...

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Web page updated on 21/05/2026

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