Last August the FSA published a consultation paper (CP11/16) on the proposal for firms that hold client money and/or client assets to produce a CASS resolution pack (CRP) – see Regulatory Roundup 34.
The purpose of such a pack is to ensure that a firm maintains information that would, in the event of an insolvency, assist an insolvency practitioner in achieving a timely return of client money/assets.
The Regulator has now released PS12/6 (‘The CASS Resolution Pack’) containing the final Rules which will be in CASS 10. For the avoidance of doubt, the Rules will not impact upon a firm that is only arranging safeguarding and administration of assets. Firms that hold client money and/or assets will be aware of the increased interest that the FSA has been taking in this area and we would draw attention to page 9 of PS12/6 where the FSA advises “We are continuing our intensive and intrusive approach to supervising firms to ensure that deficiencies in CASS compliance are identified and rectified …”. See also the reference to this area in the article ‘FSA Business Plan 2012/13’.
The core contents that must be included in a firm’s CRP are set out in CASS 10.2.1 and CASS 10.3.1. Note that the contents will need regular updating because e.g. daily reconciliations must be included in the CRP.
Firms will need to put in place arrangements to ensure that an administrator etc. can retrieve each document within 48 hours of appointment of that officer (or as a result of an FSA request). Having said that, CASS 10.1.9 lists certain documents that should be retrievable immediately. Documents do not need to be held in hard copy; electronic format is acceptable.
A proposal in CP11/16 to require firms to submit an annual report to the FSA in relation to CRP compliance has been dropped; however this has been replaced by a requirement for the CF10a to report annually to the firm’s governing body instead.
The Rules will come into force 1 October 2012 and can be found in Appendix 1 of PS12/6.
