Mandated Accounts

Question 1

Mandated accounts

Briefly explain what mandates are

Answer 1

1. A mandate is any means that allows a firm to control a client’s assets or liabilities under the following conditions:

A. The client gives consent for the firm to have this control.
B. The firm retains the mandate.
C. The mandate allows the firm to give certain types of instructions without further client involvement.

2. Key difference:
   A. If the firm instructs another party to move the client’s money → Mandate applies.
   B. If the firm already holds the client’s money and controls it directly → Mandate does NOT apply.

Question 2

Mandated accounts

What are the different types of instructions a firm is able to give for a mandate?

Answer 2

1. A mandate enables a firm to instruct another party (e.g., a bank, intermediary, custodian, or credit card provider) to:

A. Move client money from an account held by another party.
B. Transfer money the client is entitled to from another party.
C. Manage the client’s assets held by another party.
D. Incur debts or liabilities on behalf of the client.

2. The circumstances of mandates are such that the client’s further involvement is not necessary for the firms instructions described in above A-D points

Question 3

Mandated accounts

How can a mandate be given?

Answer 3

1. It can be in any written form (e.g., a separate document, part of an agreement, or multiple documents).
2. It does not need to explicitly state that it is a mandate.

Question 4

Mandated accounts

What is the key limitation of mandates?

Answer 4

1. A mandate ONLY applies when the firm instructs another party (like a bank or custodian) to control a client’s money or assets.
2. However, if the firm itself is responsible for holding the client’s money or assets, it does not count as a mandate.

E.g.
Client has a bank account with Bank A. The client gives a firm (e.g., an investment manager) the authority to instruct Bank A to transfer money from the client’s account to another investment.
A. Here, the firm is giving instructions to another party (Bank A) regarding client money.
B. This is a mandate because the firm is controlling client money held by a third party.
C. If the account itself is held by the firm - they’re NOT instructing another party to manage client’s money so, it’s not a mandate.