Special Administration Regime: ITI Capital and the Client Money Pool

ByRegReportingDesk
RegReportingDesk card: FCA, Financial Conduct Authority, United Kingdom

On 25 September 2026 ITI Capital Ltd, an FCA-authorised broker that helped customers invest in shares and bonds and looked after those investments, entered special administration. Two insolvency practitioners from Teneo Financial Advisory Ltd were appointed as special administrators, and the FCA published a customer notice the same day. The firm had agreed on 10 August 2025 to stop most regulated activity and to stop accepting new client money or custody assets, so the special administration regime now takes over a client book that stopped growing more than a year ago.

The rules sit in the Investment Bank Special Administration Regulations 2011 (SI 2011/245), made under the Banking Act 2009 and amended from 6 April 2017 by SI 2017/443. For CASS and finance teams at UK investment firms still trading, two records have specific relevance on administration: regulation 10H starts the post-appointment client money reconciliation from the firm’s records immediately after its last reconciliation, while CASS 10 requires arrangements enabling the CASS resolution-pack documents to be retrieved within the prescribed timeframe.

Related reading: FCA censures CACEIS UK over WealthTek: a financial crime controls reckoning for UK custodians

The ITI Capital timeline so far

  • 10 August 2025: ITI Capital agrees to stop most regulated activity (UK and overseas) and to stop accepting new client money or custody assets.
  • 25 September 2026: the firm enters special administration; the FCA publishes its customer notice.
  • Within 8 weeks: the special administrators will write to clients on how they plan to return client money and assets and how to claim, according to the FCA.
  • Bar date for client money claims: none announced in the FCA notice.

The eight-week letter matches a statutory clock. Regulation 15 applies paragraph 49 of Schedule B1 to the Insolvency Act 1986, under which the administrator must ordinarily comply with the statement-of-proposals requirements within eight weeks, subject to the statutory provisions allowing that period to be varied. The special-administration modifications also extend circulation to clients of whose claims the administrator is aware and whom the administrator has a means of contacting, and to the FCA and, where applicable, the PRA.

Why a broker falls inside the special administration regime

Section 232 of the Banking Act 2009 defines an “investment bank” through three conditions: Part 4A permission for safeguarding and administering investments, AIF or UCITS management or depositary activity, or dealing in investments as principal or agent; holding client assets; and incorporation in the UK. A UK-incorporated or UK-formed retail broker that has a qualifying Part 4A permission and holds client assets can therefore satisfy all three conditions.

Section 232(4) carries the narrow point. Client assets are assets the firm has undertaken to hold for a client “whether or not on trust and whether or not the undertaking has been complied with”. A firm that failed to segregate still holds client assets for this test, so a CASS breach leaves it in scope.

Entry needs a court order. Under regulation 6, the FCA, the firm, its directors or creditors can apply on Ground A (the firm is, or is likely to become, unable to pay its debts) or Ground B (it would be fair), so a firm can enter on Ground B without any finding that it cannot pay its debts. The FCA notice does not say who applied for ITI Capital or on which ground.

Three objectives with no built-in ranking

Regulation 10 sets three objectives: return client assets as soon as reasonably practicable (Objective 1); engage in a timely way with market infrastructure bodies and the Authorities (Objective 2); and rescue the firm as a going concern or wind it up in the best interests of creditors (Objective 3).

The numbering invites a misreading. Regulation 10(3) says the order of listing is not significant. Subject to any regulator direction under regulation 16, the administrator starts all three immediately, prioritises them for the best overall result for clients and creditors, and states its intended order in the statement of proposals. Regulation 10(2) also lets it return client assets in whatever order best achieves Objective 1, so clients of the same firm can get assets back at different times.

The client money reconciliation that runs on day one

Regulation 10H requires a client money reconciliation immediately after appointment. It compares amount A, the client money the firm’s records say it must hold under the client money rules, with amount B, the client money actually held in client money accounts. A shortfall is topped up from the firm’s own bank accounts; an excess goes back to the firm.

Paragraph (2) matters most for firms still trading. The reconciliation follows the method the firm adopted to meet the client money rules, “whether or not the method adopted is in compliance with those rules”, starting from the records as they stood after the firm’s last reconciliation and rolling forward to the appointment. A flawed method or a stale reconciliation becomes the administrator’s opening position.

The FCA rulebook runs in parallel. The Handbook glossary defines failure to include the appointment of a special administrator, and CASS 7A.2.2R makes failure of the firm a primary pooling event. CASS 7A.2.4R provides for client money to be treated in the relevant notional pool, including separate treatment for sub-pools where applicable, and requires distribution as soon as reasonably practicable so that each client who is a beneficiary of that pool receives a sum rateable to the client’s client money entitlement. CASS 10.1.7R separately requires in-scope firms to ensure an administrator can retrieve each document in the CASS resolution pack as soon as practicable and in any event within 48 hours.

Bar dates speed distribution, and late claimants keep their share

Regulation 12A lets the administrator set a bar date for client money claims by notice where that is necessary to expedite the return of client money, allowing clients a reasonable time after the special administration is published to calculate and submit claims. Distribution follows as soon as reasonably practicable after the bar date.

Missing that bar date delays a client without ending the entitlement. The administrator has to hold back an allowance for people who have neither claimed nor been paid and include late claimants in a subsequent distribution, and cannot claw back earlier payments to fund a late claim unless there was bad faith with the recipient complicit or a false claim.

A hard bar date is a separate tool under regulations 12B and 12C. For client assets other than client money, regulation 12B applies after a soft bar date where the distribution plan provides for the option of a hard bar date; for client money, regulation 12C applies after a regulation 12A bar date where the administrator considers it appropriate, in order to achieve Objective 1, to close the client money pool and treat further claims as unsecured. In either case court approval is required, subject to the conditions in regulation 12D.

Custody assets and the omnibus shortfall rule

Securities follow their own track. Where securities of a particular description in a client omnibus account fall short and the gap cannot be remedied once disputes are resolved, regulation 12 spreads the shortfall pro rata across the clients holding that description in that same account, by beneficial interest. Clients holding the same bond in a different omnibus account sit outside the calculation.

Each client’s share becomes an unsecured shortfall claim, valued under regulation 12(8) at the market price on the date the firm entered special administration: 25 September 2026 for ITI Capital. Regulation 12(9) takes that price from a reputable source the firm itself used for valuation or reporting before entry, or failing that, a fair and reasonable price set by the administrator.

Who pays for the return, and where FSCS cover starts

The FCA notice says distribution costs, including the special administrators’ fees, may be deducted from client money or assets if there are insufficient funds to pay for their return, and that the FSCS may then cover those costs for eligible clients. Regulation 19A shifts part of that burden where a CASS failure caused it: costs of ascertaining, controlling and distributing client assets that result from breaches of the client money rules or client asset requirements are assigned to the firm’s own estate, once the creditors’ committee agrees the amount or the court fixes it, but only as far as the firm’s own assets stretch.

The FSCS limit for investment claims is GBP 85,000 per eligible person, per firm, for firms that failed after 1 April 2019. The FCA says the FSCS may cover a shortfall in client money or assets and the cost of returning them up to that amount, subject to eligibility criteria for the client and the business. Regulation 10A requires the administrator to give the FSCS the value of client assets held for each client as soon as reasonably practicable and to answer its information requests.

Recoveries can also come from outside the estate. WealthTek LLP entered investment bank special administration in April 2023, and the FCA’s 2026 action against CACEIS UK records a voluntary ex-gratia payment of GBP 31,714,068 for the benefit of WealthTek’s clients. The FCA states that GBP 30.9 million will be received by WealthTek’s administrators and GBP 800,000 by the FSCS, with any FSCS surplus after further recovery action to be distributed to eligible WealthTek clients.

Frequently Asked Questions

Can the special administrators move client accounts to another firm without each client’s consent?

Only in some cases. Regulation 10B lets the administrator, in pursuit of Objective 1, agree a transfer of property, rights and liabilities of the firm, including client assets, to another financial institution, and the transfer takes effect despite any requirement for notice to, or consent from, a party to the client contract. Where only some of the firm’s property, rights and liabilities move, regulation 10C(1) switches that notice and consent override off, except for protected set-off and netting rights under regulation 10D(2) and property to which regulations 10E to 10G apply, and regulation 10C(3) requires provision letting transferred clients demand a reverse transfer back to the firm. Regulations 10D to 10G also stop a partial transfer from splitting set-off, netting, security or capital market arrangements or disrupting market contracts and recognised investment exchange, clearing house or CSD rules. The FCA notice does not mention a transfer for ITI Capital.

What if a client bypasses the client money pool and claims as an ordinary unsecured creditor?

Regulation 10I removes the right to interest on that debt from the date the firm entered special administration, except on the part left after deducting what the client would have received from the pool.

Key Takeaways

  • For firms still trading, the CASS compliance of the client money reconciliation method remains important because regulation 10H requires the administrator to use the firm’s adopted reconciliation method, even if that method was non-compliant, while updating the records for money received and payments, transfers and transactions made after the firm’s last reconciliation and before the administrator’s appointment.
  • Client-to-omnibus-account mapping is the record that decides who shares a securities shortfall under regulation 12.
  • The CASS 10 resolution pack is a 48-hour retrieval deliverable, which can only be proven by testing it before any insolvency event.

Sources and References

  • FCA, ITI Capital Ltd enters special administration (25 September 2026): FCA
  • The Investment Bank Special Administration Regulations 2011 (SI 2011/245), regulations 6, 10, 10A to 10I, 12, 12A to 12D, 15, 16 and 19A: legislation.gov.uk
  • The Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 (SI 2017/443): legislation.gov.uk
  • Banking Act 2009, section 232: legislation.gov.uk
  • Insolvency Act 1986, Schedule B1, paragraph 49: legislation.gov.uk
  • FCA Handbook, CASS 7A.2: FCA Handbook
  • FCA Handbook, CASS 10.1: FCA Handbook
  • FCA Handbook Glossary, failure: FCA Handbook
  • FSCS, investment protection limits: FSCS
  • FCA, Final Notice to CACEIS UK (2026): FCA (PDF)
  • FCA, CACEIS UK censured and to pay GBP 31.7m to WealthTek clients for weak financial crime controls (25 June 2026): FCA

ITI Capital’s next milestone: the administrators’ letter

The next fixed point is the administrators’ letter to ITI Capital clients, due within eight weeks of the 25 September 2026 appointment. Any regulation 12A bar date for client money claims, and its notice period, will come from the administrators and is the next date to diarise.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.

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