Content Options

CASS 1.1 Application and purpose

Application

CASS 1.1.1 G

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

Purpose

CASS 1.1.2 G

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

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

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

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

With the exception of this chapter and the insurance client money chapter, CASS does2 not apply to:

2
  1. (1)

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

  2. (2)

    the Society.

CASS 1.2.5 R

1The insurance client money chapter2 does not apply to an authorised professional firm with respect to its non-mainstream regulated activities, which are insurance mediation activities, if:

2
  1. (1)

    the firm's designated professional body has made rules which implement article 4 of the Insurance Mediation Directive;3

    3
  2. (2)

    those rules have been approved by the FCA 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

[deleted]2

2

General application: what?

CASS 1.2.7 G
  1. (1)

    [deleted]7

    7
  2. (2) 7

    [deleted]7

  3. (3)

    [deleted]7

    7
  4. (3A)

    [deleted]7

    7
  5. (4)

    [deleted]7

    7
  6. (5)

    [deleted]52

    5
  7. (6)

    [deleted]7

    7
  8. (7)

    The debt management client money chapter applies to CASS debt management firms receiving or holding client money for, or on behalf of, a client in the course of or in connection with debt management activity.6

Application for 2retail clients, professional clients and eligible counterparties2

CASS 1.2.8 G
  1. (1)

    CASS applies directly in respect of activities conducted with or for all categories of clients.2

    2
  2. (2)

    [deleted]5

    2225
  3. (3)

    The insurance client money chapter2 does not generally distinguish between different categories of client. However, the term consumer4is used for those to 4whom additional obligations are owed, rather than the term retail client.2 This is to be consistent with the client categories used in 1the Insurance: New Conduct of Business sourcebook4.

    2424
  4. (4)

    Each provision in the collateral rules, 7custody chapter, 7 the client money chapter and CASS 9 (Information to clients) 7 makes it clear whether it applies to activities carried on for retail clients, professional clients or both. 2

    57557
  5. (4A)

    7There is no further modification of the rules in the chapters referred to in (4) for activities carried on for eligible counterparties. Such clients are treated in the same way as other professional clients for the purposes of these rules.

  6. (5)

    The debt management client money chapter generally applies in respect of relevant dealings with the client category known as customers. In general, the client categories of retail clients, professional clients, as well as eligible counterparties, have no relevance to credit-related regulated activities, including debt management activities.6

CASS 1.2.9 G

[deleted]2

2

Application for affiliates7

CASS 1.2.9A G
  1. (1)

    7The fact that a firm'sclient is an affiliated company for MiFID business does not affect the operation of CASS to the firm in relation to that client.

  2. (2)

    For business that is not MiFID business, the operation of the custody chapter or the client money chapter may differ if a firm'sclient is an affiliated company and depending on certain other conditions (see, for example, CASS 6.1.10B R and CASS 7.10.26 R7).

    7

Investments and money held under different regimes

CASS 1.2.10 R

2[deleted]5

5
CASS 1.2.11 R
7
  1. (1)

    7A firm must not keep money in respect of which any one of the following chapters applies in the same client bank account or client transaction account as money in respect of which another of the following chapters applies:

    1. (a)

      the client money chapter;

    2. (b)

      the insurance client money chapter;

    3. (c)

      the debt management client money chapter.

  2. (2)

    7In accordance with CASS 7.10.36 R7, a firm which is subject to the client money chapter and holds money both (i) in its capacity as a trustee firm and (ii) other than in its capacity as a trustee firm must not keep money held in its capacity as a trustee firm in the same client bank account or client transaction account as money held other than in its capacity as a trustee firm.

    7
  3. (3)

    7To the extent that the restriction under (1) or (2) applies to a firm, the client bank accounts and client transaction accounts that a firm holds in respect of different chapters or in its different capacities (as the case may be) must be separately designated.

CASS 1.2.12 G

2The purpose of the rules regarding the segregation of investments and money held under different regimes is to reduce the risk of confusion between assets held under different regimes either on an on-going basis or on the failure of a firm or a third party holding those assets.

CASS 1.2.13 G

2A firm may, where permitted by the relevant rules7 opt to hold under a single chapter money that would otherwise be held under different chapters (see CASS 7.10.3 R and CASS 7.10.30 R7). However, making such an election does not remove the requirement under CASS 1.2.11R (1). 7

5 5 5 7 5 7

CASS 1.3 General application: where?

CASS 1.3.1 G

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

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

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 1.3.4 R

1 CASS does not apply to an incoming ECA provider acting as such.

CASS 1.4 Application: particular activities

Occupational pension scheme firms (OPS firms)

CASS 1.4.1 R

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 clients3

CASS 1.4.2 G
1
  1. (1)

    The custody chapter and the client money chapter apply in respect of any stock lending activity that is undertaken with or for a client3 by a firm. 1

    33333
  2. (2)

    The collateral rules apply, where relevant, in respect of stock lending activity.1

    3

Corporate finance business

CASS 1.4.3 G
1
  1. (1)

    The custody chapter and the client money chapter apply in respect of corporate finance business that is undertaken by a firm.1

    3333
  2. (2)

    The collateral rules apply, where relevant, in respect of corporate finance business.1

    3

Oil market activity and energy market activity

CASS 1.4.4 G
1
  1. (1)

    The custody chapter and the client money chapter apply in respect of oil market activity and other energy market activity that is undertaken by a firm.1

    3333
  2. (2)

    The collateral rules apply, where relevant, in respect of energy market activity.1

    3

Appointed representatives and tied agents2

CASS 1.4.5 G
  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's1appointed representative (when acting as such) will be treated as having been done or omitted by the firm (section 39(4) of the Act1). Equally, CASS does not apply directly to tied agents. A MiFID investment firm will be fully and unconditionally responsible for the acts and omission of the tied agents that it appoints. 2

    11
  2. (2)

    Firms should also refer to SUP 12 (Appointed representatives), which sets out requirements which apply to firms using appointed representatives and tied agents2.

Depositaries

CASS 1.4.6 R

The client money chapter1 does 3not apply to a depositary when acting as such.

1 3 3
CASS 1.4.6A G

5 Firms acting as trustee or depositary of an AIF are reminded of the obligations in FUND 3.11 (Depositaries) and Chapter IV (Depositary) of the AIFMD level 2 regulation which apply in addition to those in CASS.

CASS 1.4.6B G

9 Firms acting as trustee or depositary of a UCITS are reminded of the obligations in COLL 6.6B (UCITS depositaries) and in the UCITS level 2 regulation, 10which apply in addition to those in CASS.

CASS 1.4.7 R

Subject to CASS 1.4.6 R, 5CASS applies to a depositary, when acting as such, with the following general modifications9: 'client' means 'trustee', 'trust', 'AIF', 'AIFM acting on behalf of the AIF', ‘UCITS scheme’, ‘authorised fund manager acting on behalf of the UCITS scheme’, 9or 'collective investment scheme', as appropriate.5

5 5
CASS 1.4.8 R

[deleted]7

CASS 1.4.8A R
  1. (1)

    7The application of CASS for a trustee firm acting as a depositary is set out in CASS 1.4.6 R and CASS 1.4.7 R.

  2. (2)

    The application of CASS for a trustee firm that is not acting as a depositary is limited as follows:

    1. (a)

      the mandate rules apply;

    2. (b)

      for MiFID business, the custody chapter and the client money chapter apply; and

    3. (c)

      for business that is not MiFID business, the custody chapter and the client money chapter apply only to trustee firms acting as trustees of personal pension schemes or stakeholder pension schemes, including SIPPs.

  3. (3)

    To the extent that CASS applies to a trustee firm, it applies with the following general modification: 'client' means 'relevant trustee', 'trust', or 'beneficiary', as appropriate.

Auction regulation bidding

CASS 1.4.9 R

4Where a firm carries on auction regulation bidding it may elect to comply with CASS (but not CASS 5) in respect of this activity, subject to the general modifications in CASS 1.4.10 R.

CASS 1.4.10 R

4Where a firm has made an election in accordance with CASS 1.4.9 R, CASS is modified so that in relation to that firm:

  1. (1)

    each reference to:

    1. (a)

      designated investments;

    2. (b)

      safe custody assets; and

    3. (c)

      contingent liability investments;

    includes a reference to a two-day emissions spot;

  2. (2)

    each reference to designated investment business includes auction regulation bidding;

  3. (3)

    each reference to safeguarding and administering investments, including safeguarding and administration of assets (without arranging) and arranging safeguarding and administration of assets, includes those activities where they are carried on in relation to a two-day emissions spot; and

  4. (4)

    the reference in CASS 6.2.3A R to an 'emissions auction product that is a financial instrument' includes a two-day emissions spot;

CASS 1.4.11 G

4The effect of CASS 1.4.10 R is that when a firm makes an election in accordance with CASS 1.4.9 R:

  1. (1)

    a two-day emissions spot falls within the scope of each chapter in CASS (save for CASS 5), for example:

    1. (a)

      the reference in CASS 6.1.1 R (1)(b) to safeguarding and administering investments is modified to include the activity of safeguarding and administering a two-day emissions spot; and

    2. (b)

      any money that the firm receives or holds for or on behalf of a client in the course of or in connection with its auction regulation bidding activities will be treated as client money and so will need to be dealt with in accordance with the client money rules; and

  2. (2)

    that election also has effect in relation to rules and guidance elsewhere in the Handbook, including:

    1. (a)

      COBS 3 (Client categorisation);

    2. (b)

      COBS 6.1.7 R (Information concerning safeguarding of designated investments belonging to clients and client money);

    3. (c)

      COBS 6.1.11 R (Timing of disclosure);

    4. (d)

      COBS 16.4 (Statements of client designated investments or client money);

    5. (e)

      SUP 3 (Auditors);

    6. (f)

      SUP 10A.4.4 R (the table of controlled functions) and SUP 10A.7.9 R (CASS operational oversight function (CF10a));8

    7. (fa)

      SUP 10C.4.3R (Table of FCA controlled functions for relevant authorised persons), SYSC 5.2.30R (Table: FCA-specified significant-harm functions) and SYSC 5.2.32R (CASS oversight and the certification regime); and8

    8. (g)

      SUP 16.14 (Client money and asset return).

CASS 1.4.12 G

4The option to elect to comply with CASS set out in CASS 1.4.9 R only applies to the extent the firm is carrying on auction regulation bidding. Where a firm is carrying on MiFID business bidding, CASS applies to it in accordance with the general application rules in CASS for a firm that is carrying on MiFID business.

CASS 1.4.13 R

4Where a firm makes an election in accordance with CASS 1.4.9 R it must:

  1. (1)

    make a written record of the election, including the date from which the election is to be effective, on the date it makes the election;

  2. (2)

    keep that record from the date that it is made for a period of five years after ceasing to use the opt in.

CASS 1.4.14 R

4Where a firm that has opted in to CASS under CASS 1.4.9 R subsequently decides to cease its use of that opt in it must:

  1. (1)

    make a written record of this decision, including the date from which the decision is to be effective, on the date it takes the decision;

  2. (2)

    keep that record from the date that it is made for a period of five years after the date it is to be effective; and

  3. (3)

    discharge any outstanding fiduciary obligations that had arisen because the firm had elected to comply with CASS.

Debt management activities

CASS 1.4.15 G
  1. (1)

    6The debt management client money chapter applies to CASS debt management firms receiving or holding client money.

  2. (2)

    The mandate rules apply, where relevant, to CASS debt management firms carrying on debt management activity.

CASS 1.5 Application: electronic media and E-Commerce

Application to electronic media

CASS 1.5.1 G

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

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

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.

1
CASS 1.5.4 G

[deleted]1

1