Free practical law trialto access this resource, sign up for a free trial. The way it is presented in this book is more entertaining rather than some practical guide to getting a better grip on a troubled financial life. The fcas new rules on the protection of client assets and money for investment firms ps149 came fuly into force on 1st june 2015. Cass 7 banking exemption operation of the banking exemption notifications to clients 1 dec 2014 cass 7 trustee firms application 1 july 2014 cass 7 transfers of business transfer clauses post transfer notifications 1 dec 2014 1 dec 2014 how the new client money rules will affect your firm 5. Management of client money under cass 7 rules the challenges the client assets sourcebook cass rules implemented by the financial conduct authority fca introduced a wide range of oversight controls governing the way in which member firms have to manage client money accounts. Cass has many recordkeeping requirements listed throughout. It will also focus on the critical area of client money reconciliations and. The new rules are a significant change to the previous regime and include a complete rewrite of the client money rules in cass 7 and major changes to the custody rules in cass 6. Review of the client assets regime for investment business tisa. Client money rules are an important part of the cass sourcebook and must be understood fully. Exam study course for the cisis new client money and assets cass qualification. Securities and futures client money rules 14 section 6 cap.
Additionally, for cass 7 client money rules, there is a brief summary of its implications here. By contrast, a previous suggestion to allow a speedy return of some client money and instruments based on the books and records of the firm at. Reconciliation discrepancies cass provision the jolly. The scope of the carefully constructed equitable remedy of tracing, where a person acting as trustee such as lehman brothers was acting in respect of its clients money has wrongly mixed trust monies with its own. This course specifically looks at the rules and procedures relating to client money cass 7, and client assets cass 6 delegates. The following is a brief summary of what is expected under cass 7, though of course it is recommended that anyone who is affected by these rules read them in full. This guidance relates to the following rule s in the fca handbook conduct of business sourcebook cobs 3. Autorek significantly reduces the burden on firms required to meet the regulatory obligation of client money client asset protection, as defined in the fca cass handbook. This course specifically looks at client money, cass 7, and client assets, cass 6. To date the fsa has circulated a questionnaire to certain intermediaries for comment. It will also focus on the critical area of client money reconciliations and the widely debated issue of prudent segregation.
Management, compliance and administration professionals whose companies are regulated by fca and hold or control client money andor custody assets, particularly. Implementation of these rules is staggered over the course of a year, but the whole cass sourcebook has been rewritten and there are some fundamental changes which this newsletter summarises. This is a transliteration, verbatim, of the old cass 7. Cass 7 client money rules application of the client money rules we are introducing certain amendments to the relevant rules and further guidance to clarify when the client money rules are applicable to firms activities. The client money rules tell you how not to lose client money. A firm may treat a balance allocated to an individual client as unclaimed and therefore no longer client money under cass 7. Cass 6 client assets reconciliations and reporting cass mandates that firms must put systems and controls in place to meet obligations and maintain their records and accounts in a way that ensures accuracy. The fca has abandoned plans to push forward with the longawaited changes to its client money cass 5 rules for insurance brokers. Financial conduct authority fca client assets sourcebook smarsh. View on westlaw or start a free trial today, cass 7. If you fail, the client money distribution and transfer rules will not apply to credit balances and so the. Fca client asset rulesoverview lexispsl, practical guidance. Client money and assets the cass regime identify, assess.
Autorek will provide a fully auditable, transparent and actionable solution representing a well governed endtoend client money reconciliation and reporting process. Anyway, it is set out in cass 7 annex 3 and it goes something like this. To print the whole chapter in html, please click at the bottom of the toc panel and then click. Cass 7 banking exemption operation of the banking exemption notifications to clients 1 dec 2014 cass 7 trustee firms application 1 july 2014 cass 7 transfers of business transfer clauses post transfer notifications 1 dec 2014 1 dec 2014 how the new client money rules. In cp5 the fca proposes changes to the rules in the client assets sourcebook cass applicable to firms that hold client money, custody assets, collateral andor mandates in relation to investment business. Cass 7 client money physical receipts rules coming into force 1 june 2015 clarification that when a firm operating the normal approach physically receives client money in the form of cash, cheque or other payable order, it must record the receipt of money in the firms books and records. The extensive and detailed changes included a rewrite of the fcas client money rules and substantial amendments to the cass sourcebook. Cass 6 client assets reconciliations and reporting. The client assets resolution pack the cass rp helps speed up the return of client money and assets client assets if a firm fails. The cass client money rules for investment business make up the largest section of the cass sourcebook. This full day workshop will focus on the key requirements of the cass 7 client money rules and provide guidance on implementing effective and cost efficient compliance approaches. Client money that a firm allows another person to hold under cass 7.
The move has come following feedback received on the original proposals, reconsideration of their costs and benefits as a result of the new requirements under the financial services act 2012. If you hold client assets, do not just assume that cass 6 and 7 are the extent of your cass obligations. The fcas client assets sourcebook cass provides rules for firms to follow whenever the firm holds or controls client money or safe custody assets. The report should provide a reasonable assurance on the client money andor custody assets held by your firm. Upon such an event, the cass 7 rules envisage that all client money will be pooled and paid out to clients whose money it is, free of the claims of lbies creditors. The banking exemption theres no such thing as an absolute. Cass 7 client money immediate segregation rules coming into force 1 june 2015 clarification that firms operating the normal approach are required to receive client money directly into a client bank account, unless specifically allowed in the rules, e. An account which the firm uses to deposit client money under cass 7. Firms must read the professional statement on client money handling and take steps to ensure that they comply with the requirements. This gives us an overview of your client money and safe custody assets. Cass overviewby practical law financial servicesrelated contentan overview of the fcas client assets sourcebook cass, the fcas approach to supervising firms compliance with cass and anticipated developments that will impact on the regulation in the uk of client money and safe custody assets.
These apply when a firm receives or holds client money in the course of, or in connection with, its mifid or designated investment. Client money must be held pursuant to a statutory trust under cass 5. Feb 28, 2017 especially when talking about the application of the cass rules. Last june 2014 the fca published a policy statement for investment firms holding client money and client assets. I have spoken to a lot of firms that are comfortable that they dont have client money because they apply the banking exemption. Cass helps ensure the safety of client money and assets if a firm fails and leaves the market. New rules have come into effect which impact all firms authorised to hold client assets cass. This course focuses on providing knowledge, understanding and insight in relation to the client money and asset sourcebook cass as a document and as a body of regulation applicable to thousands of firms. For firms with cass 7 permission, it means theyve held client money. If your firm operates in loanbased crowdfunding, you may need to follow certain cass rules. The dvp exemption allows a firm a waiver from the full rigours of the cass safe custody and client money rules for money or assets delivered to the firm when settling a delivery versus payment transaction. The equivalent to the shortfall provision under cass 6.
Even the provision of such authority for a oneoff activity needs to be treated per the rules. Dec, 2017 this full day workshop will focus on the key requirements of the cass 7 client money rules and provide guidance on implementing effective and cost efficient compliance approaches. An authorised fund manager will not be in breach of the requirement under cass 7. The book is a compilation of 100 tips or rules about money that is supposed to guide you along the path of financial security. Auditors must prepare a separate template schedule identifying the client assets sourcebook cass rule breaches noted during the period covered by the report. If you intend to use the banking exemption, you must first tell your client that. Review of the client assets regime for investment business. Lbie was put into administration on 15 september 2008.
This is an article about the fcas custody and client money rules client assets. Financial conduct authority fca client assets sourcebook. May, 2019 an amount of money that rightly belongs to your client. In either case, the effect is that the money is held for the purpose of the further rules contained in cass 5. If a firm wishes to cease to hold client money for a client it must comply with cass 7. Designed to provide overseers of client money, compliance officers and individuals engaged in client money and assets administration with the technical knowledge necessary to succeed in this evolving area. The banking exemption cass provision the jolly contrarian. Where a firm establishes one or more subpools, the provisions of cass 7. At menzies we understand the rules and how they can impact on a company, we want to get to know you and your business so that we can provide relevant and tailored advice and help your business grow without encountering any unwelcome regulatory issues. The firm must keep each record under this rule for a period of five years after the. Please set the page orientation to landscape for printing of bilingual texts on a single page. Client money acknowledgment letter cass provision the jolly. Lbie had, however, not properly followed the cass rules.
Assuming the services you provide to your client fall within those covered by cass 7 primarily designated investment business and mifid business, then that those amounts will be client money and as long as an exemption doesnt apply, it should be covered by cass 7 protection. Client money and assets cass a unit of the investment. The new rules are a significant change to the previous regime and include a complete rewrite of the client money rules in cass 7 and major changes to the custody rules in cass. Requirements in respect of a client s written direction.
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