The condition in the licence
A funds rule is a sentence in a document, and its shape is what matters: whether it names an account, a duty, a tier or a policy. The four shapes below cover essentially every arrangement in use, and each has its own gap.
| Shape of the condition | What it requires | The gap it leaves |
|---|---|---|
| Separation only | Customer money held in a designated account, used only for customers | No answer to a shortfall: the account can be correct and insufficient |
| Separation with a duty | The above, plus a periodic reconciliation and a duty to restore any deficit by a deadline | A gap that opens and is discovered between two checks; the duty is only as good as compliance with it |
| A graded tier | The operator must meet one of several defined levels - often from a basic separation to a full guarantee | Whatever the tier's own definition omits; the tier is a category, and the operator's actual level must be confirmed |
| Cover by policy or guarantee | An insurance policy, bond or guarantee, usually with a stated minimum cover | The cap, the exclusions, and whether the failure that happens is the event the policy defines |
Where the condition lives
Three documents, in descending order of authority, and a reader should prefer the highest one available.
- The licence register. Where a regime publishes conditions, the entry against an operator is the primary source - the actual wording that binds it, as opposed to a summary of it.
- The operator's own terms. Usually a section on how customer funds are held, often naming the account arrangement and stating whether funds are segregated, protected or held on trust. Worth reading for the mechanism words: account, trust, reconciliation, cover.
- A published customer-money statement. Some regimes require an operator to publish how it holds customer money, and some require an audit of it. Where one exists it is the most useful document of the three, because it is about money rather than about rules.
Where the three disagree, the register controls the terms, and the statement is evidence about compliance. Where none of the three exists, the answer is that the arrangement is not disclosed - which is itself the answer.
What a licence condition is not
A condition does not pool risk across operators. It does not create a pot that a regulator can draw on. It does not follow the money into a different company, and it does not cover a balance that was never customer money in the first place - which is why the bonus part of a balance is usually excluded, and why the next page exists.
what the reader holds: a licence, a tier name, and the tier's own published definition
what the reader does not hold: the account arrangement, the reconciliation frequency, the cover
to close the gap: read the register entry, then the terms section, then any published statement
three documents, and the answer is only as good as the highest one you actually read
This desk does not name authorities, operators, banks, insurers or schemes, and it does not tell a reader where to hold money. Regimes differ in their wording rather than in their categories: essentially every one of them is doing one of the four things in the table above. The useful skill is recognising which shape a clause is, not memorising which country writes which words.
The partner link on this page is a disclosed sponsored link. It asserts nothing about any licence condition, tier or policy, and names no authority.
Open the partner accountWhere to go next
- The words - what each label is worth once the condition is known.
- The custody check - the five lookups, in order, with what each one proves.
- What was in flight - why a bonus balance is usually outside all of this.
Separation · duty Tier · cover Undisclosed