Compound Growth Ltd 2016 -
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CLIENT MONEY & ASSETS
RESOLUTION PACK: CASS RP
The Client Money & Assets Resolution Pack (CASS RP):
One of the key focus areas of the clients assets regime in the UK is the requirement to create and maintain a Client Money and Assets Resolution Pack, known as a CASS RP.
All firms that are subject to the CASS Custody Rules and/or the CASS Client Money Rules (Chapters 6 & 7 of the Client Assets Sourcebook), are required to gather specific information regarding the firms handling of safe custody assets and client money, which in the event of a firm’s failure, would be useful to an insolvency practitioner (IP).
The aim of this rule is to assist with the swift return of client money and safe custody assets compared to the previous rules that had been in place.
Those firms that are not strangers to holding client money will be very familiar with the CASS RP requirements, these having been in force since October 2012, however for those unfamiliar, the provisions for CASS RP can be found in Chapter 10 of the Client Assets Sourcebook.
The requirements for the Client Money & Assets Resolution Pack include, amongst others:
- information on those institutions which they (or through agents or otherwise) have appointed to hold client assets and the accounts at these institutions.
- the firm’s latest reconciliations showing the most up to date information available as to which of those institutions and accounts currently hold client assets
- the names and contact details of individuals holding the relevant client assets information at a third party and instructions
- how to access and use any relevant websites (e.g. service providers include third-
party administrators, outsourced parties and affiliated companies of the firm) - written notification or trust acknowledgement letters
- the most recent internal reconciliations relating to safe custody assets
- the most recent external reconciliations relating to safe custody assets
- the most recent internal reconciliations relating to client money
Given that much of this information will not remain static for long, it is to be expected that the contents of the CASS resolution pack will change from time to time. One such example is that daily reconciliations must be included within the pack, that obviously change daily. Since firms must ensure that it reviews the contents of the CASS RP on an ongoing basis, changes may occur frequently to maintain its accuracy.
It should be noted that there have also been more recent developments relating to client money, with the introduction of similar legislation at a European level.
MiFID II requires that investment firms holding financial instruments or funds belonging to clients make “adequate arrangements” to safeguard the rights of those clients and ESMA proposed for firms to hold basic information, consistent to IOSCOs Principal 1, relating to client money and client assets so that it “may be used as an audit trail” and readily accessed at short notice by authorities and insolvency practitioners.
These requirements, consistent with IOSCO’s Principle 1 of their Recommendations Regarding the Protection of Client Assets would obligate firms to hold:
- Relevant internal accounts and records that readily identify the balances of funds and instruments held for each client (reconciliations, client ledgers, cash books etc.);
- where an investment firm holds client funds (in accordance with Article 18 of the MiFID II Directive), details of the accounts where client funds are held (bank or qualifying money market fund) and the relevant agreements with those entities;
- details of accounts opened with third parties and the relevant agreements with those entities where financial instruments are held by the investment firm in relation to algorithmic trading (Article 17 of the MiFID II Directive);
- details of third parties carrying out any related (outsourced) tasks;
- key individuals of the firm involved in related processes, including those responsible for oversight of the firm’s requirements in relation to the safeguarding of client assets; and
- relevant client agreements.
Help with CASS RP and Client Money Health Check Support
Our Client Money support specialists have a wealth of regulatory knowledge and experience and can help your firm undertake a Client Money Health Check relevant to your business.
This may be of particular interest to those that are concerned that your Client Money & Client Assets Resolution Pack may be incomplete, missing core contents requirements and records or if you feel that the frequency of your CASS RP updates may be inadequate. If you would like to discuss any aspect of the CASS regime and how this affects your firm, please get in touch for a helpful and no obligation discussion.
Client Money Support & Compliance Assistance
Compound Growth can assist firms of all sizes to ensure they have the necessary procedures in place to remain compliant with the regulator’s rules pertaining to client money and client assets as set out in the CASS Sourcebook.
In particular we can support your firm in establishing suitable accounting systems as well as developing client money policies in line with industry best practice and the FCA’s guidance.
If you would like to discuss client money or client assets further, please feel free to contact us or email enquiries@compoundgrowth.co.uk.
