Part 3Disclosure of offers of financial products
Procedure for making regulated offers: Money for financial products must be held in trust
87Money for financial products must be held in trust
This section applies to money paid to an issuer or offeror of regulated products if the money is paid by a person (A)—
- to acquire the financial products or an increased interest in the financial products; or
- as a further contribution or investment or a further deposit as referred to in section 11(2)(c).
The issuer or offeror must hold the money in trust for A until—
- the financial products are issued or transferred; or
- the money is otherwise applied for the purpose for which it was paid (for example, to increase the extent of A's interest in a scheme or A's deposit or to pay a fee); or
- the money is repaid to A; or
- the money is applied in accordance with A's express instructions given after the application for financial products was made and the money was paid.
The issuer or offeror must—
- deal with the money, while it is held in trust, in the prescribed manner (including ensuring that any prescribed requirements relating to the investment of the money are complied with); and
- if the money needs to be repaid, ensure the money is repaid as soon as practicable and, in any event, no later than 1 month after the obligation to repay arises.
This section does not apply to derivatives (but see section 448, which provides for regulations relating to the holding and application of investor funds and property by derivatives issuers).