Annual classification and notification

Firms holding client money (as defined by CASS 7) and/or safe custody assets (as defined by CASS 6) from investment business are required, once a year, to determine their CASS classification. The firm must notify the FCA of its classification within 15 business days of 31 December of the previous calendar year.

 

Firms this applies to

All firms carrying on investment business with relevant permissions to hold client money and/or safe custody assets must notify us of their CASS firm type classification annually.

There are firms with relevant client assets permissions that either do not hold safe custody assets, or the assets they hold for their clients are not within the scope of CASS (for example, where the clients’ assets arise from non-FCA regulated activities).

We send a CASS classification questionnaire every December to all CASS small firms and firms that have relevant permissions to hold client money and/or safe custody assets but reported zero balances in the previous calendar year. We will email your firm’s CF10a or SMF18 or, where the firm is not required to have a CF10a or SMF18, we will contact the firm’s Principal User of Gabriel.

What happens

CASS medium and large firms

Your firm does not have to report on any balances as you should have submitted Client Money and Asset Returns (CMARs) in the previous calendar year. We will confirm your CASS classification in January of the following year (as set out in CASS 1A.2.11G).

CASS small firms

We will send your firm the CASS classification questionnaire asking you to confirm your highest client money and/or safe custody assets holdings during the last calendar year to determine your classification for the coming calendar year. If your firm has held zero balances, we will require you to confirm its highest projected holdings for the coming calendar year.

Firms with relevant permissions to hold client money and/or safe custody assets that reported zero balances in the last annual classification and notification requirement

We will email your firm a questionnaire asking you to confirm your highest client money and/or safe custody assets holdings during the last calendar year to determine your classification for the coming calendar year. If your firm has held zero balances, it will be required to confirm its highest projected holdings for the coming calendar year.

Deposit-taking firms which apply the banking exemption

If your firm holds or accepts deposits and undertakes designated investment business, we will send you the questionnaire. This is because these firms can hold any monies arising from investment business carried out for their clients as either client money as defined by CASS 7 or a banking deposit (in the latter case the client money rules (CASS 7) will have a reduced application: see CASS 7.10.16R). So these firms must notify us of their client money and/or safe custody assets holdings.

Authorised Professional Firms (APFs)

Many APFs will have permissions which allow them to hold client money and/or safe custody assets. If your firm has these permissions, we will send you the CASS classification questionnaire. Your firm must report any client money (as defined by CASS 7) and/or safe custody assets (as defined by CASS 6) it has held.

If your CASS classification may change

If you think your CASS classification will change you may want to prepare in advance – particularly if your firm becomes a CASS medium or large firm. This is because if you are classified as one of those firms you will need to complete the Client Money and Asset Return (CMAR) and allocate the CASS oversight function to a director or senior manager – (CF10a or SMF18).

If you are aware your CASS classification will change, contact [email protected] for more information.

Further information