In this blog, fscom’s Senior Manager Julie Tuffrey discusses the crucial role of the CASS regime and how fscom can help firms navigate the complexities of the regulation to ensure they are meeting their obligations.
In the dynamic landscape of financial services, regulatory requirements are ever evolving, and it is essential for firms to keep pace with the changes. As per the 2023/2024 Business Plan, regulators are showing no sign of slowing down, and the momentum is set to continue. In response, firms are proactively aligning their activities to ensure compliance with major areas of regulation like Consumer Duty & ESG. In doing so, firms must not lose sight of their existing obligations, particularly the crucial role of the CASS regime.
CASS, or the Client Assets Sourcebook, is a cornerstone of the Financial Conduct Authority’s (FCA) regulations and obligations for firms. It aligns directly to the protection of consumers and supports a well-functioning market; instilling confidence for both customers and the broader financial industry as a whole. CASS as a thematic, directly aligns to all of the FCA’s objectives and is expected to remain a focal point of regulatory scrutiny.
At its core, CASS places the onus on firms to protect client assets whilst they hold them, (Principle 10 states “A firm must arrange adequate protection for clients’ assets when it is responsible for them”). In practice, this Principle reflects the core requirement for firms to maintain controls and adequate organisational arrangements that ensure the client money and assets they are responsible for are controlled, reconciled and reported. In doing so, they ensure accurate records and sufficient protection levels, guaranteeing the prompt return of assets in an insolvency situation.
Since the 2008 banking crisis, the financial industry has diligently embraced and integrated CASS standards into its operations. Significant progress has been made, and many firms can now demonstrate their CASS footprint, approach, key CASS decisions, practices and controls effectively.
Nevertheless, progress should not lead to complacency. Some areas remain susceptible to failure, effects of which can be potentially harmful to the protection afforded under CASS or create the potential for harm. Success to date is not an indicator that firms can relax in this regard, focus is still required.
The regulator continues to place high regard to CASS capabilities and controls and the role of the CASS Oversight Officer (PRz) remains critical for firms, alongside consideration of related regulatory change and impact assessment. With the embedding of consumer duty, CASS could have impact areas to be considered and rationale documented – for example, interest treatment and the passing on of interest to clients – where this is retained by firms – there may be considerations to be made on potential for that being considered a hidden fee for customers.
CASS permissions and arrangements should remain at the forefront of firms’ compliance governance, including the use of permissions granted – the FCA expects firms to ensure the appropriateness for their part VI permissions and in circumstances where they are not utilised, consider the variation of permissions to remove any permissions not required.
How fscom can help
Amid these challenges, specialised support becomes essential. At fscom, we are pragmatic and expert – coming directly from industry with in-depth knowledge and hands-on experience with CASS, helping firms in preparing for (prior to audits), mitigating audit risks (following audit outcomes), and responding appropriately to management points. We ensure actions are structured into tangible work packages with appropriate governance, ownership and completion to address any focus areas. We still see a number of fundamental areas cited in audits, from documentation and accuracy to failures in controls, impacts and crystallisation of risks.
Whether a start-up or an established enterprise, fscom partners with its clients at every step of their CASS journey. From initial applications and permissions to ongoing CASS strategy and maturity. fscom offers tailor-made solutions to address specific needs. We take the time to fully understand a firm’s business model and translate findings into practical examples and actionable solutions. Uniquely, we also celebrate excellence and we ensure firms see where they are doing well and meeting best practice – invaluable information for customer confidence.
In conclusion, as firms navigate the complexities of CASS compliance, partnering with fscom provides a competitive advantage. We can stress-test your capabilities with an insolvency mindset, and demonstrate your maturity, aligned to best practice for CASS. If you have areas to be enhanced, we can help you structure that into a comprehensive roadmap, providing an outline vs best practice that we see across the industry.
Be audit-ready, prepared, and work with passionate experts invested in your success and CASS capabilities. Choose fscom to unlock compliance excellence and build a robust blueprint for the future.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.