This policy statement makes changes to the rules in Client Assets sourcebook (CASS).
In our consultation paper CP13/5: Review of the client assets regime for investment business we proposed changes to the rules in CASS to address specific risks, to clarify the requirements firms must comply with and to enhance our client assets regime to achieve better results for consumers and increase confidence in financial markets.
This policy statement summarises the feedback we received to the consultation paper, provides our response and sets out our final rules.
Who is this Policy Statement aimed at?
This policy statement affects all firms that are subject to CASS because they conduct investment business and hold client money, custody assets, collateral and/or mandates in relation to that investment business (or rely on an exemption contained within CASS). This includes loan-based crowdfunding firms who recently became subject to the client money rules in CASS 7 through the changes published in PS14/4.
This policy statement will also be of interest to:
- Auditors in relation to providing annual auditors’ client assets reports and other reports related to the alternative approach to client money segregation and non-standard methods of internal client money reconciliation.
- Third-party providers who provide back office functions that firms use for their client assets operations.
- Market infrastructure firms, including central counterparties, exchanges and other intermediaries with whom firms may place client assets.
- Banks with whom firms deposit client money.
- Custodians and other third parties who may hold client assets in a client transaction account for a firm subject to CASS.
- Insolvency practitioners and their advisers that would be responsible for distributing client assets if a firm that holds client assets enters into insolvency proceedings.
What are the next steps?
All investment firms to which the CASS sourcebook applies should review the instrument set out in Appendix 1 in detail and establish how the changes we are making will affect their business. If these changes affect your firm, you will need to comply with the new rules by the dates set out in Chapter 2 in Table 1.
For more information see:
- CP13/5 - Review of the client assets regime for investment business
- PS14/4: The FCA’s regulatory approach to crowdfunding over the internet, and the promotion of non-readily realisable securities by other media
- The FCA Handbook