Modification by consent: CASS 1A.1.1R(3)

Find out about modifications by consent for CASS medium and CASS large firms.

This modification by consent will enable CASS medium and CASS large firms that have cancelled their authority to hold client money and their permission for safeguarding and administering investments (without arranging):

  • to cease to be categorised as a CASS large or medium firm and cease providing the annual CASS firm notification required by CASS 1A.2.9R;
  • to cease submitting a monthly CMAR (Client Money and Asset Return) report via Gabriel; and
  • to apply for a director or senior manager within the firm to cease performing the CASS operational oversight (CF10a) controlled function

Firms the modification applies to

This modification by consent is available to CASS medium and CASS large firms, as defined by CASS 1A.2.7R, that have:

  • ceased to hold client money and custody assets
  • cancelled the connected permissions for safeguarding and administering investments (without arranging)
  • introduced the limitation not to hold client money

How the modification works

At the start of the calendar year each firm is categorised according to the amount of client money and/or the total value of their safe custody assets they held in the previous year (or proposes to hold in the forthcoming year if they did not previously hold). Their classification determines their CASS oversight and reporting requirements. Firms categorised as either CASS medium or CASS large firms have to submit a monthly Client Money and Asset Return (CMAR) via Gabriel and also have a director or senior manager allocated the function of CF10a. Firms are also required to notify the FSA of their CASS firm category in accordance with CASS 1A.2.9R.

Currently the CASS rules require firms to continue submitting monthly CMAR reports to the end of the year. This means that CASS medium and CASS large firms are required to continue submitting nil returns each month even after their relevant client money and/or safe custody asset permissions have been cancelled and an auditors report submitted. Since a firm is categorised as a CASS firm based on its previous year’s holding, the FSA rules also require firms to submit returns for the whole of the year following the year in which they actually cancel their CASS permissions. Firms can neither change CASS firm category (unless opting to be treated as the higher category from January 2013) nor can they be de-classified.

This modification by consent will allow firms that have ceased to hold client money and custody assets and have cancelled their relevant permissions to cease to be categorised as CASS medium and CASS large firms because of their historical holdings. The modification will also remove the requirement for firms to notify the FCA of their CASS firm category the following year.

As part of the application for modification of the relevant rules by consent, the firm must provide a letter from its external independent auditor to confirm that the firm does not hold client money and or safeguards and administers custody assets.

Modification direction 

How to use the modification

If you want to take advantage of this modification by consent you should email [email protected] or write to us at Central Waivers Team, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.

Please ensure to include a copy of the external independent auditor’s letter confirming the firm does not hold client money and custody assets.

We will then write to you to confirm that the modification has been granted and publish each modification direction we grant on our website.