• COBS 14.4.1 COBS 14.4.1 Application

    (a) To the extent that the rules in this section ("the Client Money Distribution Rules") are inconsistent with section 233 of the Insolvency Regulations, these Rules will prevail.
    (b) This chapter applies to an Authorised Person that holds Client Money which is subject to the Client Money rules when a Pooling Event occurs.

    • Guidance

      1. This section seeks to facilitate the timely return of Client Money to Clients or Relevant Money to Payment Service Users, as applicable, in the event of the Failure of an Authorised Person or third party at which the Authorised Person holds Client Money or Relevant Money, as applicable.
      2. Following a Pooling Event, an Authorised Person must sell all non-cash assets representing the proceeds of, or directly traceable from, Client Money and use the proceeds of the sale to satisfy claims of Statutory Trust beneficiaries made in accordance with this chapter.
      3. Relevant Money held by an Authorised Person conducting Payment Services is intended to be treated in the same manner as Client Money pursuant to the Client Money Distribution Rules, in terms of its segregation for the purposes of distribution to Payment Service Users following a Primary Pooling Event or a Secondary Pooling Event. Distribution of Relevant Money subject to a Statutory Trust is intended to occur either in accordance with the balances in the respective Payment Accounts of Payment Service Users, or alternatively to be used for the purpose of redemption of Stored Value held by Payment Service Users.