CASS firm classification and operational oversight

Part

CASS Client Assets Sourcebook

Chapter

CASS firm classification and operational oversight

Printed on: 14/10/2024

Rulebook at: 01/01/2013

CASS 1A

CASS firm classification and operational oversight

CASS 1A.1

Application

01/01/2011

CASS 1A.1.1

(1) Subject to (2), (3) and (4), this chapter applies to a firm to which either or both of CASS 6 (Custody rules) and CASS 7 (Client money rules) applies.
(2) In relation to a firm to which CASS 5 (Client money: insurance mediation activity) and CASS 7 (Client money rules) apply, this chapter does not apply in relation to client money that a firm holds in accordance with CASS 5.
(3) The rules and guidance in CASS 1A.2 apply to a firm even if at the date of the determination or, as the case may be, the notification, either or both of CASS 6 and CASS 7 do not apply to it, provided that:

(a) either or both of those chapters applied to it during part or all of the previous calendar year; or
(b) it projects that either or both will apply to it in the current calendar year.

(4) This chapter does not apply to a firm to which only CASS 6 applies, applied or is projected to apply, merely because it is, was, or is projected to be a firm which arranges safeguarding and administration of assets.

01/01/2013

CASS 1A.2

CASS firm classification

01/01/2011

CASS 1A.2.1

The application of certain rules in this chapter depends upon the 'CASS firm type' within which a firm falls. The 'CASS firm types' are defined in accordance with CASS 1A.2.7 R. The 'CASS firm type' within which a firm falls is also used to determine whether it is required to have the CASS operational oversight function described in CASS 1A.3.1A R and whether the reporting obligations in SUP 16.14 (Client money and asset return) apply to it.

01/01/2013

CASS 1A.2.2

(1) A firm must once every year, and by the time it is required to make a notification in accordance with CASS 1A.2.9R (4), determine whether it is a CASS large firm, CASS medium firm or a CASS small firm according to the amount of client money or safe custody assets which it holds, using the limits set out in the table in CASS 1A.2.7 R.
(2) For the purpose of determining its 'CASS firm type' in accordance with CASS 1A.2.7 R, a firm must:

(a) if it currently holds client money or safe custody assets, calculate the higher of the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year ending on 31 December and use that figure to determine its 'CASS firm type';
(b) if it did not hold client money or safe custody assets in the previous calendar year but projects that it will do so in the current calendar year, calculate the higher of the highest total amount of client money and the highest total value of safe custody assets that it projects that it will hold during that year and use that figure to determine its 'CASS firm type'; but
(c) in either case, exclude from its calculation any client money held in accordance with CASS 5 (Client money: insurance mediation activity).

01/01/2013

CASS 1A.2.3

For the purpose of calculating the value of the total amounts of client money and safe custody assets that it holds on any given day during a calendar year a firm must:

(1) in complying with CASS 1A.2.2R (2)(a), base its calculation upon internal reconciliations performed during the previous year;
(2) in relation to client money or safe custody assets denominated in a currency other than sterling, translate the value of that money or that safe custody assets into sterling at the previous day's closing spot exchange rate; and
(3) in relation to safe custody assets only, calculate their total value using the previous day's closing mark to market valuation, or if in relation to a particular safe custody asset none is available, the most recent available valuation.

01/01/2011

CASS 1A.2.4

One of the consequences of CASS 1A.2.2 R is that a firm that determines itself to be a CASS small firm or a CASS medium firm will, at least if it exceeds during the course of a calendar year either of the limits in CASS 1A.2.7 R that applies to it, become in the next calendar year:

(1) in the case of a CASS small firm, a CASS medium firm or a CASS large firm; and
(2) in the case of a CASS medium firm, a CASS large firm.

01/01/2011

CASS 1A.2.5

(1) Notwithstanding CASS 1A.2.2 R, provided that the conditions in (2) are satisfied a firm may elect to be treated:

(a) as a CASS medium firm, in the case of a firm that is classed by the application of the limits in CASS 1A.2.7 R as a CASS small firm; and
(b) as a CASS large firm, in the case of a firm that is classed by the application of the limits in CASS 1A.2.7 R as a CASS medium firm.

(2) The conditions to which (1) refers are that in either case:

(a) the election is notified to the FSA in writing;
(b) the notification in accordance with (a) is made at least one week before the election is intended to take effect; and
(c) the FSA has not objected.

01/01/2013

CASS 1A.2.6

CASS 1A.2.5 R provides a firm with the ability to opt in to a higher category of 'CASS firm type'. This may be useful for a firm whose holding of client money and safe custody assets is near the upper categorisation limit for a CASS small firm or a CASS medium firm.

01/01/2011

CASS 1A.2.7

CASS firm types

CASS firm type

Highest total amount of client money held during the firm's last calendar year or as the case may be that it projects that it will hold during the current calendar year

Highest total value of safe custody assets held by the firm during the firm's last calendar year or as the case may be that it projects that it will hold during the current calendar year

CASS large firm

more than £1 billion

more than £100 billion

CASS medium firm

an amount equal to or greater than £1 million and less than or equal to £1 billion

an amount equal to or greater than £10 million and less than or equal to £100 billion

CASS small firm

less than £1 million

less than £10 million

01/01/2011

CASS 1A.2.8

In relation to the calendar year ending on 31 December 2011, a firm must notify the FSA in writing:

(1) by 31 January 2011 of the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year, if it held client money or safe custody assets in that previous year; or
(2) by 31 January 2011 of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during 2011, if it did not hold client money or safe custody assets in the previous calendar year but at the date of its notification to the FSA projects that it will do so in 2011; or
(3) in any other case, before the date on which the firm begins to hold client money or safe custody assets, of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the remainder of 2011; and
(4) in every case, of its 'CASS firm type' classification.

01/01/2011

CASS 1A.2.8A

In addition, in relation to the calendar year ending on 31 December 2011, a CASS small firm must by 31 July 2011 notify the FSA in writing of:

(1) the highest total amount of client money and the highest total value of safe custody assets held during the period between 1 January 2011 and 30 June 2011; or
(2) if it did not hold client money or safe custody assets in that period, the highest total amount of client money and the highest total value of safe custody assets that the firm projects, as at the date of its notification to the FSA under this rule, it will hold between 1 July 2011 and 31 December 2011.

01/06/2011

CASS 1A.2.9

Once every calendar year a firm must notify to the FSA in writing the information specified in (1), (2) or (3) as applicable, and the information specified in (4), in each case no later than the day specified in (1) to (4):

(1) if it held client money or safe custody assets in the previous calendar year, the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year, notification of which must be made no later than the fifteenth business day of January; or
(2) if it did not hold client money or safe custody assets in the previous calendar year but at any point up to the fifteenth business day of January the firm projects that it will do so in the current calendar year, the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the current calendar year, notification of which must be made no later than the fifteenth business day of January; or
(3) in any other case, the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the remainder of the current calendar year, notification of which must be made no later than the business day before the firm begins to hold client money or safe custody assets; and
(4) in every case, of its 'CASS firm type' classification, notification of which must be made at the same time the firm makes the notification under (1), (2) or (3).

01/01/2013

CASS 1A.2.10

For the purpose of the annual notification to which CASS 1A.2.9 R refers, a firm must apply the calculation rule in CASS 1A.2.3 R.

01/01/2013

CASS 1A.2.11

For the purpose of CASS 1A.2.9R (1), the FSA will treat that obligation as satisfied if a firm submitted a CMAR for each period within the previous calendar year in compliance with SUP 16.14.3 R.

01/01/2013

CASS 1A.2.12

A firm's 'CASS firm type' and any change to it takes effect:

(1) if the firm notifies the FSA in accordance with CASS 1A.2.9 R (1) or CASS 1A.2.9 R (2), on 1 February following the notification; or
(2) if the firm notifies the FSA in accordance with CASS 1A.2.9 R (3), on the day it begins to hold client money or safe custody assets; or
(3) if the firm makes an election under CASS 1A.2.5 R (1), and provided the conditions in CASS 1A.2.5 R (2) are satisfied, on the day the notification made under CASS 1A.2.5 R (2)(a) states that the election is intended to take effect.

01/01/2013

CASS 1A.2.13

Any written notification made to the FSA under this chapter should be marked for the attention of: "Client Assets Firm Classification".

01/01/2013

CASS 1A.3

Responsibility for CASS operational oversight

01/01/2011

CASS 1A.3.1

A CASS small firm must allocate to a director performing a significant influence function or a senior manager performing a significant influence function responsibility for:

(1) oversight of the firm's operational compliance with CASS; and
(2) reporting to the firm's governing body in respect of that oversight.

01/01/2013

CF10a: the CASS operational oversight function

CASS 1A.3.1A

A CASS medium firm and a CASS large firm must allocate to a director or senior manager the function of:

(1) oversight of the operational effectiveness of that firm's systems and controls that are designed to achieve compliance with CASS;
(2) reporting to the firm's governing body in respect of that oversight; and
(3) completing and submitting a CMAR to the FSA in accordance with SUP 16.14.

01/10/2011

CASS 1A.3.1B

CASS 1A.3.1A R describes the controlled function known as the CASS operational oversight function. The table of controlled functions in SUP 10.4.5 R together with SUP 10.7.9 R specify the CASS operational oversight function as a required function for a firm to which CASS 1A.3.1A R applies.

01/10/2011

CASS 1A.3.1C

If, at the time a firm becomes a CASS medium firm or a CASS large firm in accordance with CASS 1A.2.12 R (1) or CASS 1A.2.12 R (2), the firm is not able to comply with CASS 1A.3.1A R because it has no director or senior manager who is an approved person in respect of the CASS operational oversight function, the firm must:

(1) take the necessary steps to ensure that it complies with CASS 1A.3.1A R as soon as practicable, which must at least include submitting an application for a candidate in respect of the CASS operational oversight function within 30 business days of the firm becoming a CASS medium firm or a CASS large firm; and
(2) until such time as it is able to comply with CASS 1A.3.1A R, allocate to a director performing a significant influence function or a senior manager performing a significant influence function responsibility for:

(a) oversight of the firm's operational compliance with CASS;
(b) reporting to the firm's governing body in respect of that oversight; and
(c) completing and submitting the CMAR to the FSA in accordance with SUP 16.14.

01/01/2013

CASS 1A.3.3

(1) Subject to (2), a firm must make and retain an appropriate record of the person to whom responsibility is allocated in accordance with CASS 1A.3.1 R, CASS 1A.3.1A R or CASS 1A.3.1C R (2).
(2) A CASS small firm must make and retain such a record only where it allocates responsibility to a person other than the person in that firm who performs the compliance oversight function.
(3) A firm must ensure that the record made under this rule is retained for a period of five years after it is made.

01/01/2013