CASS 11.10 Payments to creditors

CASS 11.10.1R

Where a CASS debt management firm receives client money from a client in relation to a debt management plan or for the purpose of distribution to the client's creditors, the firm must pay that money to creditors as soon as reasonably practicable, save in the circumstances in CASS 11.10.3 R.

CASS 11.10.2G

In the FCA's view, the payment to creditors under CASS 11.10.1 R should normally be within five business days of the receipt of cleared funds.

CASS 11.10.3R

The circumstances referred to in CASS 11.10.1 R are:

  1. (1)

    the contract between the client and the CASS debt management firm expressly provides that client money might be held for more than five business days without being distributed to creditors;

  2. (2)

    the existence of such a term expressly providing that client money might be held for more than five business days without being distributed to creditors has been separately brought to the attention of the client prior to his entering into the contract; and

  3. (3)

    the CASS debt management firm has explained to the client the risks and implications, if any, of payment to creditors being delayed prior to the entry into the contract.

CASS 11.10.4R

On each occasion that a CASS debt management firm receives client money from a client in relation to a debt management plan, or for the purpose of distribution to the client's creditors, and it is proposed not to make a client's payment to creditors within five business days of receipt of the client money in the circumstances described in CASS 11.10.3 R (1), it must:

  1. (1)

    as soon as reasonably practicable and within the five business day period, inform the client's creditors of the fact that it has received client money from the client for the purpose of distribution to his or her creditors and that it will not distribute that client money to the creditors within the five business-day period; and

  2. (2)

    perform daily reconciliations of the money held for the client concerned in accordance with the provisions of CASS 11.11.

CASS 11.10.5R

On each occasion a CASS debt management firm receives client money from a client in relation to a debt management plan, or for the purpose of distribution to the client's creditors, and is unable for any reason other than in the circumstances described in CASS 11.10.3 R (1) to make a payment to the client's creditors within five business days of receipt, it must:

  1. (1)

    inform the client of the delay and the reason for the delay;

  2. (2)

    inform the client of the risks and implications of the late payments;

  3. (3)

    inform the client's creditors of this delay as soon as reasonably practicable and within the period of five business days of the receipt of the relevant client money; and

  4. (4)

    perform daily checks of its records of the money held for the client concerned in accordance with the provisions of CASS 11.11.

CASS 11.10.6R
  1. (1)

    Subject to (2), where a CASS debt management firm receives client money from a client in relation to a debt management plan or for the purpose of distribution to the client's creditors, and it fails to pay that money to creditors as soon as reasonably practicable following its receipt (see CASS 11.10.1 R and CASS 11.10.2 G), it must put the client into the financial position he would have been in had the delay not occurred.

  2. (2)

    Paragraph (1) does not apply in the circumstances described in CASS 11.10.3 R or where the delay is due to circumstances beyond the firm's control.

CASS 11.10.7G

Putting a client into the position he would have been in had the delay not occurred under CASS 11.10.6 R should include paying to the client a sum equivalent to the amount of any additional interest which would not have accrued but for the delay and any default charges that have been applied to the account as a result of the delay.