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CASS 1.1 Application and purpose

Application

CASS 1.1.1 G RP

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

Purpose

CASS 1.1.2 G RP

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.

CASS 1.2 General application: who? what?

General application: who?

CASS 1.2.1 G RP

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

CASS 1.2.2 R RP

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

  1. (1)

    all regulated activities except to the extent that a provision of CASS provides for a narrower application; and

  2. (2)

    unregulated activities to the extent specified in any provision of CASS.

CASS 1.2.3 R RP

CASS does not apply to:

  1. (1)

    an ICVC; or

  2. (2)

    an incoming EEA firm other than an insurer, with respect to its passported activities; or

  3. (3)

    a UCITS qualifier.

CASS 1.2.4 R RP

CASS 2 (Custody rules), CASS 3 (Collateral rules) and CASS 4 (Client money and mandates: designated investment business) do not apply to:

  1. (1)

    an authorised professional firm with respect to its non-mainstream regulated activities; or

  2. (2)

    the Society.

CASS 1.2.5 R RP

1 CASS 5 (Client money and mandates: insurance mediation activity) does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, which are insurance mediation activities, if:

  1. (1)

    the firm's designated professional body has made rules which implement article 4 of the IMD;

  2. (2)

    those rules have been approved by the FSA under section 332(5) of the Act; and

  3. (3)

    the firm is subject to the rules in the form in which they were approved.

CASS 1.2.6 G

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

General application: what?

CASS 1.2.7 G RP
  1. (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. (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. (3)

    CASS 2 (Custody rules), CASS 3 (Collateral rules) and CASS 4 (Client money and mandates: designated investment business) apply in relation to regulated activities, conducted by firms, which fall within the definition of designated investment business.

  4. (4)

    CASS 5 (Client money and mandates: insurance mediation activity) applies in relation to regulated activities, conducted by firms, which fall within the definition of insurance mediation activities.1

Application for private customers, intermediate customers and market counterparties

CASS 1.2.8 G RP
  1. (1)

    CASS applies directly in respect of activities conducted with or for market counterparties as well as with or for customers. The term client refers both to market counterparties and to customers.

  2. (2)

    In CASS 2 (Custody rules), CASS 3 (Collateral rules) and CASS 4 (Client money and mandates: designated investment business), the term customer refers toprivate customers and intermediate customers, but not market counterparties. Where relevant, each of the provisions of CASS makes clear whether it applies to activities carried on with or for private customers, intermediate customers, or both.

  3. (3)

    CASS 5 (Client money and mandates: insurance mediation activity) 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 private customer. This is to be consistent with the client categories used in relation to the obligations in ICOB in relation to insurance mediation activities.1

CASS 1.2.9 G

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).

CASS 1.3 General application: where?

CASS 1.3.1 G RP

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

UK establishments: general

CASS 1.3.2 R RP

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.

UK firms: passported activities from EEA branches

CASS 1.3.3 R RP

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.

CASS 1.4 Application: particular activities

Occupational pension scheme firms (OPS firms)

CASS 1.4.1 R RP

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

  1. (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. (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.

Stock lending activity with or for customers

CASS 1.4.2 G RP

CASS 2 (Custody rules) to CASS 4 (Client money and mandates: designated investment business) apply in respect of any stock lending activity undertaken with or for a customer by a firm.

Corporate finance business

CASS 1.4.3 G RP

CASS 2 (Custody rules) to CASS 4 (Client money and mandates: designated investment business) apply in respect of corporate finance business undertaken by a firm.

Oil market activity and energy market activity

CASS 1.4.4 G RP

CASS 2 (Custody rules) to CASS 4 (Client money and mandates: designated investment business) apply in respect of oil market activity and other energy market activity undertaken by a firm.

Appointed representatives

CASS 1.4.5 G RP
  1. (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).

  2. (2)

    Firms should also refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives.

Depositaries

CASS 1.4.6 R RP

CASS 4.1 to CASS 4.4 donot apply to a depositary when acting as such.

CASS 1.4.7 R RP

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

  1. (1)

    except in CASS 4.5, 'client' means 'trustee', 'trust' or 'collective investment scheme' as appropriate; and

  2. (2)

    in CASS 4.5, 'client' means 'trustee' 'collective investment scheme' or 'collective investment scheme instrument' as appropriate.

CASS 1.4.8 R

In relation to a trustee firm which is not a depositary, when acting as such, and which falls within COB 11.5.1 R(1);

  1. (1)

    CASS does not apply except CASS 4.5 (Mandates); and

  2. (2)

    in CASS 4.5, 'Client' means 'trustee', 'trust' or 'trust instrument' as appropriate.

CASS 1.5 Application: electronic media and E-Commerce

Application to electronic media and E-Commerce

CASS 1.5.1 G RP

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.

CASS 1.5.2 G RP

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

  1. (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. (2)

    be able to demonstrate that the customer wishes to communicate using this form of media; and

  3. (3)

    if entering into an agreement, make it clear to the customer that a contractual relationship is created that has legal consequences.

CASS 1.5.3 G RP

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.

Modification of CASS resulting from the E-Commerce Directive

CASS 1.5.4 G

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.