Application and general provisions

Part

CASS Client Assets Sourcebook

Chapter

Application and general provisions

Printed on: 14/10/2024

Rulebook at: 01/11/2007

CASS 1

Application and general provisions

CASS 1.1

Application and purpose

01/12/2004

Application

CASS 1.1.1

CASS applies to a firm as specified in the remainder of this chapter.

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Purpose

CASS 1.1.2

The purpose of this chapter is to set out to whom, for what activities, and within what territorial limits the rules, evidential provisions and guidance in CASS apply.

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CASS 1.2

General application: who? what?

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General application: who?

CASS 1.2.1

The rules in CASS 1.2 set out the maximum scope of this sourcebook. The application of CASS is modified for certain activities by 1 CASS 1.4. Also particular chapters or sections of CASS may have provisions which limit their application.

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CASS 1.2.2

CASS applies to every firm, except as provided for in CASS 1.2.3 R, with respect to the carrying on of:

(1) all regulated activities except to the extent that a provision of CASS provides for a narrower application; and
(2) unregulated activities to the extent specified in any provision of CASS.

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CASS 1.2.3

CASS does not apply to:

(1) an ICVC; or
(2) an incoming EEA firm other than an insurer, with respect to its passported activities; or
(3) a UCITS qualifier.

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CASS 1.2.4

With the exception of this chapter and the insurance client money chapter, CASS does not apply to:

(1) an authorised professional firm with respect to its non-mainstream regulated activities; or
(2) the Society.

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CASS 1.2.5

The insurance client money chapter does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, which are insurance mediation activities, if:

(1) the firm's designated professional body has made rules which implement article 4 of the Insurance Mediation Directive;
(2) those rules have been approved by the FSA under section 332(5) of the Act; and
(3) the firm is subject to the rules in the form in which they were approved.

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CASS 1.2.6

Authorised professional firms should be aware of PROF 5.2 (Nature of non-mainstream regulated activities).

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General application: what?

CASS 1.2.7

(1) The approach in CASS is to ensure that the rules in a chapter are applied to firms in respect of particular regulated activities or unregulated activities.
(2) The scope of the regulated activities to which CASS applies is determined by the description of the activity as it is set out in the Regulated Activities Order. Accordingly, a firm will not generally be subject to CASS in relation to any aspect of its business activities which fall within an exclusion found in the Regulated Activities Order. The definition of designated investment business includes, however, activities within the exclusion from dealing in investments as principal in article 15 of the Regulated Activities Order (Absence of holding out etc).
(3) The non-directive custody chapter and the non-directive client money chapter apply in relation to regulated activities, conducted by firms, which fall within the definition of designated investment business other than MiFID business.
(3A) The collateral rules apply in relation to regulated activities, conducted by firms, which fall within the definition of designated investment business (including MiFID business).
(4) The insurance client money chapter applies in relation to regulated activities, conducted by firms, which fall within the definition of insurance mediation activities.
(5) The MiFID custody chapter and the MiFID client money chapter apply in relation to regulated activities, conducted by firms, which fall within the definition of:

(a) MiFID business; and
(b) designated investment business other than MiFID business, where the firm has, in accordance with those rules, opted to comply with the provisions of those rules with respect of this business.

(6) The mandate rules apply in relation to regulated activities, conducted by firms, which fall within the definition of designated investment business (including MiFID business) and insurance mediation activity, except where it relates to a reinsurance contract.

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Application for retail clients, professional clients and eligible counterparties

CASS 1.2.8

(1) CASS applies directly in respect of activities conducted with or for all categories of clients.
(2) In CASS, except in the insurance client money chapter, MiFID custody chapter and MiFID client money chapter, the term customer refers to retail clients and professional clients, but not eligible counterparties. Where relevant, each of the provisions of CASS makes clear whether it applies to activities carried on with or for retail clients or professional clients, or both.
(3) The insurance client money chapter does not generally distinguish between different categories of client. However, the term retail customer is used for those whom additional obligations are owed, rather than the term retail client. This is to be consistent with the client categories used in relation to the obligations in ICOB in relation to insurance mediation activities.
(4) Each provision in the MiFID custody chapter and the MiFID client money chapter makes it clear whether it applies to activities carried on or for retail clients, professional clients or both. There is no further modification of the rules in these chapters in relation to activities carried on for eligible counterparties. Such clients are treated in the same way as other professional clients for the purposes of these rules.

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CASS 1.2.9

Firms are reminded that the definition of inter-professional business does not include safekeeping and administration of assets or agreeing to carry on that activity: CASS will apply in this context (and will apply to the holding of money for clients in connection with inter-professional business).

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Investments and money held under different regimes

CASS 1.2.10

Where a firm is subject to both the non-directive custody chapter and the MiFID custody chapter, it must ensure segregation between designated investments held under each chapter, including that designated investments held under different chapters with the same third party, are held in different, separately designated, accounts.

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CASS 1.2.11

Where a firm is subject to more than one of the non-directive client money chapter, the insurance client money chapter and the MiFID client money chapter, it must ensure segregation between money held under each chapter, including that money held under different chapters is held, in different, separately designated, client bank accounts or client transaction accounts.

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CASS 1.2.12

The purpose of the rules regarding the segregation of investments and money held under different regimes is to reduce the risk of confusion between assets held under different regimes either on an on-going basis or on the failure of a firm or a third party holding those assets.

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CASS 1.2.13

A firm may opt to hold under a single chapter designated investments that would otherwise be held under different chapters (see CASS 6.1.7 G). A firm may also opt to hold under a single chapter money that would otherwise be held under different chapters (see CASS 4.1.1A R, CASS 5.1.1 R (3) and CASS 7.1.3R (1)).

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CASS 1.3

General application: where?

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CASS 1.3.1

The rules in CASS 1.3 set out the maximum territorial scope of this sourcebook. Particular rules may have express territorial limitations.

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UK establishments: general

CASS 1.3.2

Except as provided for in CASS 1.2.3 R (2), CASS applies to every firm, in relation to regulated activities carried on by it from an establishment in the United Kingdom.

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UK firms: passported activities from EEA branches

CASS 1.3.3

CASS applies to every UK firm, other than an insurer, in relation to passported activities carried on by it from a branch in another EEA State.

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CASS 1.3.4

CASS does not apply to an incoming ECA provider acting as such.

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CASS 1.4

Application: particular activities

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Occupational pension scheme firms (OPS firms)

CASS 1.4.1

In the case of OPS activity undertaken by an OPS firm, CASS applies with the following general modifications:

(1) references to customer are to the OPS or welfare trust, whichever fits the case, in respect of which the OPS firm is acting or intends to act, and with or for the benefit of which the relevant activity is to be carried on; and
(2) if an OPS firm is required by any rule in CASS to provide information to, or obtain consent from, a customer, that firm must ensure that the information is provided to, or consent obtained from, each of the trustees of the OPS or welfare trust in respect of which that firm is acting, unless the context requires otherwise.

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Stock lending activity with or for customers

CASS 1.4.2

(1) The non-directive custody chapter and the non-directive client money chapter apply in respect of any stock lending activity that is not MiFID business undertaken with or for a customer by a firm. If the stock lending activity involves MiFID business or if the firm has opted to comply with the MiFID custody chapter or the MiFID client money chapter with respect to its non-MiFID business, then the MiFID custody chapter and the MiFID client money chapter apply.
(2) The collateral rules apply, where relevant, in respect of stock lending activity, whether or not the activity amounts to MiFID business

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Corporate finance business

CASS 1.4.3

(1) The non-directive custody chapter and the non-directive client money chapter apply in respect of corporate finance business that is not MiFID business undertaken by a firm. If the corporate finance business involves MiFID business or if the firm has opted to comply with the MiFID custody chapter or the MiFID client money chapter with respect to its non-MiFID business, then the MiFID custody chapter and the MiFID client money chapter apply.
(2) The collateral rules apply, where relevant, in respect of corporate finance business, whether or not the activity amounts to MiFID business.

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Oil market activity and energy market activity

CASS 1.4.4

(1) The non-directive custody chapter and the non-directive client money chapter apply in respect of oil market activity and other energy market activity that is not MiFID business undertaken by a firm. If the energy market activity (including oil market activity) involves MiFID business or if the firm has opted to comply with the MiFID custody chapter or the MiFID client money chapter with respect to its non-MiFID business, then the MiFID custody chapter and the MiFID client money chapter apply.
(2) The collateral rules apply, where relevant, in respect of energy market activity, whether or not the activity amounts to MiFID business.

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Appointed representatives and tied agents

CASS 1.4.5

(1) Although CASS does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of CASS, anything done or omitted by a firm's appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act ). Equally, CASS does not apply directly to tied agents. A MiFID investment firm will be fully and unconditionally responsible for the acts and omission of the tied agents that it appoints.
(2) Firms should also refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives and tied agents.

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Depositaries

CASS 1.4.6

The non-directive client money chapter and the MiFID client money chapter do not apply to a depositary when acting as such.

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CASS 1.4.7

The remainder of CASS applies to a depositary, when acting as such, with the following general modifications:

(1) except in the mandate rules, 'client' means 'trustee', 'trust' or 'collective investment scheme' as appropriate; and
(2) in the mandate rules, 'client' means 'trustee' 'collective investment scheme' or 'collective investment scheme instrument' as appropriate.

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CASS 1.4.8

(1) CASS does not apply to a trustee firm which is not a depositary or the trustee of a personal pension scheme or stakeholder pension scheme, except for the MiFID custody chapter, the MiFID client money chapter and the mandate rules.
(2) In the MiFID custody chapter, the MiFID client money chapter and the mandate rules, 'client' means 'trustee', 'trust', 'trust instrument' or 'beneficiary', as appropriate.

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CASS 1.5

Application: electronic media and E-Commerce

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Application to electronic media

CASS 1.5.1

GEN 2.2.14 R (References to writing) has the effect that electronic media may be used to make communications that are required by the Handbook to be "in writing" unless a contrary intention appears.

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CASS 1.5.2

For any electronic communication with a customer, a firm should:

(1) have in place appropriate arrangements, including contingency plans, to ensure the secure transmission and receipt of the communication; it should also be able to verify the authenticity and integrity of the communication; the arrangements should be proportionate and take into account the different levels of risk in a firm's business;
(2) be able to demonstrate that the customer wishes to communicate using this form of media; and
(3) if entering into an agreement, make it clear to the customer that a contractual relationship is created that has legal consequences.

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CASS 1.5.3

Firms should note that GEN 2.2.14 R does not affect any other legal requirement that may apply in relation to the form or manner of executing a document or agreement.

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CASS 1.5.4

The application of CASS may be modified by ECO (as a result of the E-Commerce Directive implementation). These modifications will only apply to a firm which carries on electronic commerce activity. Firms should consult ECO for details.

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