There has been a proposal by the Financial Reporting Council (FRC) to set up new standards that will help auditors check financial service providers’ money is kept separate from their clients.
It has been estimated about £100bn of client money and £11tr of custody assets are held by 1500 investment businesses.
According to the FRC, auditors should express an opinion whether clients’ assets are safe in case the financial service provider collapses.
The collapse of investment companies such as Lehman Brothers during the financial crisis highlighted weaknesses in “client asset” rules.
The draft rules set up by the FRC will improve the audit of client assets, strengthen auditor training and shield client assets.
A consultation period by the FRC is ongoing and will end on the 31st July 2015.