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: 01/10/2011

CASS 1A

CASS firm classification and operational oversight

CASS 1A.1

Application

01/01/2011

CASS 1A.1.1

(1) Subject to (2) and (3), 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.

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CASS 1A.2

CASS firm classification

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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 the reporting obligations that apply to it in SUP 16.14 (Client money and asset return).

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CASS 1A.2.2

(1) A firm must once every year, and within the time limit provided for by 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).

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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.

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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.

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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 made by including it in the notice to the FSA provided under CASS 1A.2.8 R or CASS 1A.2.9 R;
(b) it is given at least one week before the election is intended to take effect; and
(c) the FSA has not objected.

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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.

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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

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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.

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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

In relation to each calendar year beginning with that which ends on 31 December 2012, a firm must notify the FSA in writing:

(1) within 15 business days of 31 December of the previous calendar year, 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 calendar year; or
(2) within 15 business days of 31 December of the previous year, 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 then current calendar year, 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 the then current calendar year; 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 the then current calendar year; and
(4) in every case, of its 'CASS firm type' classification.

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CASS 1A.2.10

For the purpose of the annual notification to which CASS 1A.2.8 R and CASS 1A.2.9 R refer, and for the purpose of the notification to which CASS 1A.2.8A R refers, a firm must apply the calculation rule in CASS 1A.2.3 R.

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CASS 1A.2.11

For the purpose of CASS 1A.2.9R (1), the FSA will treat that obligation as satisfied if a firm submits a CMAR for the month ending 31 December in compliance with month ending 31 December in compliance with SUP 16.14.3 R.

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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;
(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.

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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.

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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.3.2

A CASS large firm and a CASS medium firm must not later than 31 January 2011 notify the FSA in writing of the identity of the person to whom responsibility has been allocated in accordance with CASS 1A.3.1 R or, where CASS 1A.2.8R (3) applies, before the date on which that firm begins to hold client money or safe custody assets.

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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 or CASS 1A.3.1A R.
(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.

01/10/2011