Client Money Protection
We protect our clients' funds, holding individual clients' money in segregated accounts across a range of major banks.
What does 'segregated' mean?
Segregated client money is held entirely separate from IG's own money, ensuring that in the event of default by IG, client funds will be returned to the clients rather than being treated as a recoverable asset by general creditors
The money is 'ring-fenced' in separate bank accounts which are held in trust with the clients as the beneficiaries, and is not mixed with IG’s own funds.
Are my funds held on a segregated basis?
When a client opens an account with IG, they will be categorised as either a retail client, a professional client or an eligible counterparty – and IG will inform them of this categorisation. All retail client funds will be segregated, as per the Financial Services Authority (FSA) rules surrounding client money.
In addition, IG goes above and beyond these rules by segregating all individuals’ funds. This means that even if they are classified as a professional client, an individual will still have their funds segregated.
The only clients who will not have their funds segregated from IG’s are those professional corporate clients or eligible counterparties who have signed a document consenting to a ’title transfer’ of their funds to IG.
How are my funds protected with IG?
Funds transferred from an individual client to IG will usually be received directly into a segregated client bank account.
If money from an individual client is received into a general IG account it is still considered to be client money from the time it reaches IG’s accounts (rather than only being considered client money once it has been placed into a segregated client account).
IG uses only its own funds for hedging and does not pass client money to hedging counterparties or to any part of the business as working capital. IG does not initiate speculative positions in the market and has no exposure to corporate or sovereign debt. IG is debt-free, with substantial liquidity and capital reserves significantly in excess of regulatory requirements.
IG also has a ‘Client Money Committee’ which is responsible for ensuring the client money regulations are being adhered to in all IG Group entities, as well as reviewing and evaluating all the client money controls and procedures. The Committee meets fortnightly.
In addition, we have engaged PricewaterhouseCoopers LLP to conduct an independent review of our controls and procedures for client money calculation and segregation. By commissioning this report we have taken an additional step, over and above standard audit checks and our regulators’ reporting requirements. The report is freely available to clients – please email us if you would like a copy.
Where does IG hold my funds?
All money held on behalf of clients is held in accounts with a diverse range of top-tier banks.
What happens if IG goes into liquidation?
If IG goes into liquidation, clients whose funds were held in segregated accounts would have their share of the segregated money pool returned, minus the administrators’ costs in handling and distributing these funds.
If there was a shortfall then individuals (and some smaller companies) may be eligible for compensation from the Financial Services Compensation Scheme.
What is the Financial Services Compensation Scheme and am I eligible?
The Financial Services Compensation Scheme (FSCS) is the UK’s compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. The FSCS covers business conducted by firms authorised by the FSA.
IG clients would fall under the ‘investments’ claim category, whereby the cover is £50,000 per person per firm. If a client held an account with an authorised investment firm and there was a shortfall in segregation, they might still receive up to £50,000 in compensation.
What happens if a bank holding client money on behalf of IG goes into liquidation?
Selection of banking counterparties will only take place once a full risk assessment has been undertaken, and all banks are reviewed semi-annually to ensure that they continue to meet the requirements of the FSA’s rules and IG’s own policy on banks holding client money.
It is IG’s policy that all institutional counterparties holding client money accounts must maintain an investment-grade rating. These counterparties are subject to an ongoing internal credit review process.
Any losses would be shared by clients in proportion to their share of the total amount held with a bank which has failed. In the UK, any funds lost as a result of this would be covered by the FSCS under the ‘banks/building societies’ claim category, up to a limit of £85,000 per person per institution.
Are there any additional safeguards in place regarding client money?
IG’s client money processes and compliance with FSA rules are audited annually by its statutory auditors, and then reported to the FSA. IG is also required to file a monthly Client Money & Assets Return to the FSA, a relatively new requirement that was implemented by the regulator in October 2011. The purpose of the Return is to ensure that the FSA receives regular and comprehensive information from a firm which is able to hold client money on behalf of its clients. This is only a requirement for medium and large firms (as defined by the FSA).
IG Group Holdings PLC, the parent of IG Group, is listed on the London Stock Exchange and is a constituent of the FTSE 250 index. It has a current market capitalisation of approximately £1.67 billion and capital resources for the year ended May 2012 of £331.8m. An unrivaled balance sheet and adherence to both London Stock Exchange and Financial Services Authority rules afford clients the security, resources and stability of a multinational organisation.
|Client Money Protection|
All retail client money is held in segregated client bank accounts in accordance
with the FSA's client money rules
|All money held on behalf of clients is distributed across a diverse range of top-tier banks|
|IG only uses its own funds for hedging|
|IG does not pass retail client money through to hedging counterparties|
|IG is not an investment bank|
|IG does not initiate speculative positions in the market|
|IG has no exposure to corporate or sovereign debt|
|IG is regulated by the FSA|
|IG is owned by IG Group Holdings plc – a FTSE 250 company listed on the LSE|
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