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Client Asset Rules Finalised


On 23 June 2022, the Central Bank of Ireland (the "Central Bank") published in final form its revised Investment Firms Regulations, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Investment Firms Regulations 2022, (the "2022 Regulations") containing amendments to the Client Asset Requirements (the "CAR") together with an accompanying draft Guidance Note on what will be the third edition of the Investment Firms Regulations (the "2022 CAR Guidance").

The 2022 CAR Guidance addresses the revisions made to the CAR contained in Part 6 of the 2022 Regulations (the "CAR 2022") in order to assist investment firms and credit institutions to begin preparations to fully comply with CAR 2022 at the end of the transitional period which commenced on the publication of the 2022 Regulations and will end for investment firms on 1 July 2023, and for credit institutions on 1 January 2024.

These revisions follow from the Central Bank's December 2020 Consultation Paper (“CP133”) on enhancements to the CAR, as contained as contained in Part 6 of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Investment Firms) Regulations 2017 (the "2017 Regulations") ("CAR 2017").

In July 2021, the Central Bank published its feedback statement on the proposed enhancements (the "Feedback Statement") which included:

  • Extending the scope and application of the CAR to include credit institutions undertaking MiFID investment business;
  • Introducing new requirements regarding client disclosure and consent;
  • Introducing new CAR guidance to clarify the Central Bank’s expectations as to how client funds should be segregated;
  • Introducing new requirements, and placing some existing CAR guidance on a legislative footing, in relation reconciliations; and
  • Introducing new requirements and CAR guidance on the contents of the Client Asset Management Plan (the "CAMP").

Key Changes

The amendments to the CAR are broadly in line with the changes highlighted by the Central Bank in CP133 a summary of the key changes is provided below.

The Central Bank has expanded the definition of “investment firm” in the 2022 Regulations to include credit institutions authorised under Section 9 of the Central Bank Act 1971 meaning credit institutions when carrying out MiFID investment business will be required to comply with the CAR.

There are seven core principles of the Central Bank's CAR regime: segregation; designation and registration; reconciliation; calculation; client disclosure and consent; risk management; and client asset examination. In CP133, the Central Bank proposed to enhance some of these existing obligations. The 2022 CAR Guidance gives additional detail on what the Central Bank expects from investment firms, as summarised below.

1.  Segregation

In the Central Bank's Feedback Statement, it signalled that it would clarify its expectation that client funds must be deposited directly into a third party client asset account. The 2022 CAR Guidance has addressed this by introducing new rules on depositing different types of client assets with third parties.  It also sets out specific guidance on how the investment firm should treat client assets in the form of cheques, currency and financial instruments.

2.  Reconciliation

The Central Bank had proposed several measures to strengthen the reconciliation process in CP133. This has been addressed in both the 2022 CAR Guidance and the 2022 Regulations with the introduction of new "internal" reconciliation processes and by putting previous guidance on reconciliation processes on a statutory footing.

3. Calculation

The Central Bank had previously signalled its intent to align the calculation of client funds with the reconciliation process. This has been addressed by the introduction of a new daily calculation process which requires the investment firm to investigate discrepancies with one working day, identify the cause of the discrepancy within five working days, and to correct the discrepancy as soon as possible.

In respect of client funds calculations, the 2022 CAR Guidance outlines what balances should be taken into account for the calculation. Likewise, the 2022 CAR Guidance outlines the method of calculating client financial instrument resources.

        4. Client disclosure and consent

In the Feedback Statement, the Central Bank signalled that it would be enhancing the client disclosure and consent provisions, with a particular emphasis on addressing more complex business models. In order to create a more robust client disclosure and consent process, CAR 2022 will now set out the mandatory minimum information that investment firms should disclose to clients and potential clients in its terms of business to enable the clients to make informed decisions. Credit institutions that will become subject to the 2022 Regulations for the first time from 1 January 2024 should review any prior written consents received from existing clients against the 2022 Regulations.

The 2022 CAR Guidance notes that Central Bank will not prescribe a standard form for prior written client consent required by the 2022 Regulations.

A Notable Absence

The Central Bank indicated in the Feedback Statement that it would be introducing guidelines on how investment firms should deal with an uncontactable client in the context of a transfer of business[1]. It stated that it would set out certain minimum requirements for making contact with the client. However, at present the 2022 CAR Guidance does not appear to address this issue directly. This is disappointing as practical guidance on dealing with uncontactable clients would be welcomed by industry, particularly in light of the many changes in the Irish financial services sectors.

5.  Risk Management

The 2022 CAR Guidance introduces two matrixes which can be used to objectively assess compliance with the established risk management framework, the Client Asset Applicability Matrix ("CAAM") and the Client Asset Risk Matrix ("CARM"). The 2022 CAR Guidance also sets out the structure and a non-exhaustive list items that may be included in the contents of the CAMP in addition to the required information under the CAR 2022.

Head of Client Asset Oversight

Now that the scope of the CAR has been extending to include credit institutions engaging in MiFID investment activities such credit institutions will also be required to appoint the Pre-Approval Controlled Function ("PCF") of Head of Client Asset Oversight ("HCAO").  In the Feedback Statement, the Central Bank clarified that this requirement will also apply to those individuals who are already designated as the “Single Officer”[2] or who hold existing PCFs within credit institutions.


The transition period commenced on the publication of the 2022 Regulations and will end for investment firms on 1 July 2023, and for credit institutions on 1 January 2024.  CAR 2017 will remain in force until repealed by the 2022 Regulations on 1 July 2023 and firms are required to comply with the CAR 2017 for the duration of the transitional period.

The 2022 CAR Guidance will remain in draft form until such time as the CAR 2022 comes into force. Final Guidance will be uploaded to the Central Bank website before the end of the transitional period.

Next Steps

In order to comply with the CAR 2022 at the end of the transitional period (1 July 2023 for investment firms and 1 January 2024 for credit institutions), firms should complete a gap analysis, identify actions required to put in place the necessary internal systems, procedures, policies and expertise in order to comply with the requirements. As some of the requirements may require re-papering of existing client facing documentation and obtaining consent from clients, this should be built into the time frame for ensuring compliance once the transitional period has ended.


This article was co-authored by partners Louise Dobbyn & Joe Beashel, senior associate James O'Doherty, associate Ciarán Moloney and solicitor Nicole Ward. For further information or advice in respect of the topics covered in this insight, please get in touch with a member of the team or your usual Matheson contact.  Full details of Matheson's Financial Institutions Group together with further updates, articles and briefing notes written by members of these teams.

This material is provided for general information purposes only and does not purport to cover every aspect of the themes and subject matter discussed, nor is it intended to provide, and does not constitute or comprise, legal or any other advice on any particular matter. For detailed and specific professional advice, please contact any member of our Financial Institutions Group.


[1] Question 21, Feedback Statement


[2] Under Paragraph 6(1) of Schedule 3 to the MiFID Regulations