The challenges of complying with the FCA’s client assets regime

Abstract

One of the areas on which the Financial Conduct Authority’s (FCA’s) spotlight
has shone most brightly in recent times is client assets (CASS) protection
and CASS rules. In addition to having a generally more intensive and rigorous
supervisory approach to CASS, the FCA has recently strengthened the rules
themselves. Coupled with a new standard for audit firms’ reporting on CASS
compliance, this represents a new era for CASS compliance with corresponding
challenges for investment firms, both large and small. The paper concludes
with the message that the FCA’s focus on CASS will not just remain, but is
likely to be replicated by other regulators across the world. It therefore
explores the challenges of complying with the CASS regime, including the
additional burdens on corporate funding, the scope for varying
interpretations of the rules themselves and the implicit rule of developing
an insolvency mindset. Usefully, the paper then goes on to provide some
practical guidance around building an effective control framework and
embedding effective CASS compliance within the business.