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Status: You are viewing the version of the handbook as on 2019-12-18.

CASS 13.2 Organisational requirements and responsibility for CASS operational oversight

CASS 13.2.1R

1A firm must, when holding client money, make adequate arrangements to safeguard the customer’s rights and prevent the use of client money for its own account.

CASS 13.2.2R

1A firm must introduce adequate organisational arrangements to minimise the risk of the loss or diminution of client money, or of rights in connection with client money, as a result of misuse of client money, fraud, poor administration, inadequate record-keeping or negligence.

CASS 13.2.3R

1A firm must allocate to a director or senior manager responsibility for:

  1. (1)

    oversight of the firm’s operational compliance with CASS 13;

  2. (2)

    reporting to the firm’s governing body in respect of that oversight; and

  3. (3)

    completing and submitting the client money parts of a CMC001 return in accordance with SUP 16.25.3R to SUP 16.25.8R.

CASS 13.2.4R
  1. (1)

    1A firm must make and retain an appropriate record of the person to whom responsibility is allocated in accordance with CASS 13.2.3R.

  2. (2)

    But a firm must make and retain such a record only where:

    1. (a)

      there is a person in that firm who performs the compliance oversight function; and

    2. (b)

      it allocates responsibility in accordance with CASS 13.2.3R to a person other than the person in that firm who performs the compliance oversight function.

  3. (3)

    A firm must ensure that a record made under this rule is retained for a period of five years after it is made.

CASS 13.2.5G
  1. (1)

    2This paragraph CASS 13.2.5G explains how CASS 13.2.3R fits into the senior managers and certification regime. This paragraph does not deal with a firm that is a PRA-authorised person.

  2. (2)

    The senior managers and certification regime is summarised in SYSC 23.3 (Overview of the senior managers and certification regime).

  3. (3)

    The function in CASS 13.2.3R is not a separate controlled function and performing that function does not require approval as an approved person.

  4. (4)

    There are three elements of the senior managers and certification regime that are particularly relevant to CASS 13.2.3R, although they do not all apply to all SMCR firms:

    1. (a)

      a firm’s obligation to allocate certain responsibilities to its SMF managers (see SYSC 24 (Senior managers and certification regime: Allocation of prescribed responsibilities));

    2. (b)

      a firm’s obligation to ensure that one or more of its SMF managers have overall responsibility for each of its activities, business areas and management functions (see SYSC 26 (Senior managers and certification regime: Overall and local responsibility)); and

    3. (c)

      the certification regime (see SYSC 27 (Senior managers and certification regime: Certification regime)).

  5. (5)
    1. (a)

      This paragraph (5) explains how CASS 13.2.3R applies to a limited scope SMCR firm. Most firms carrying on a regulated claims management activity will be limited scope SMCR firms.

    2. (b)

      Neither SYSC 24 nor SYSC 26 applies to a limited scope SMCR firm.

    3. (c)

      The firm may choose to allocate the function in CASS 13.2.3R to an SMF manager.

    4. (d)

      The firm may instead choose to allocate the function in CASS 13.2.3R to someone who is not an SMF manager.

    5. (e)

      Where (d) applies, the person performing the function in CASS 13.2.3R will fall into the certification regime. The function in CASS 13.2.3R will be the CASS oversight FCA certification function in SYSC 27.8.1R.

  6. (6)
    1. (a)

      This paragraph (6) explains how CASS 13.2.3R applies to a core SMCR firm.

    2. (b)

      SYSC 24 applies to a core SMCR firm but SYSC 26 does not.

    3. (c)

      The firm must allocate responsibility for the firm’s compliance with CASS to one of its SMF managers (see SYSC 24.2.1R). That responsibility is an “FCA-prescribed senior management responsibility”. The full list of FCA-prescribed senior management responsibilities is in the table in SYSC 24.2.6R.

    4. (d)

      Although the CASS function in SYSC 24.2.1R is different from the function in CASS 13.2.3R, the firm may allocate the function in CASS 13.2.3R to the SMF manager in CASS 13.2.5G(6)(c).

    5. (e)

      The firm may choose to allocate the function in CASS 13.2.3R to someone who is not an SMF manager. If so:

      1. (i)

        that person will be subject to the certification regime described in SYSC 27 (Senior managers and certification regime: Certification regime);

      2. (ii)

        that person will be subject to supervision by the SMF manager in (c); and

      3. (iii)

        the function in CASS 13.2.3R will be the CASS oversight FCA certification function in SYSC 27.8.1R.

  7. (7)
    1. (a)

      This paragraph (7) explains how CASS 13.2.3R applies to an enhanced scope SMCR firm.

    2. (b)

      Both SYSC 24 and SYSC 26 apply to an enhanced scope SMCR firm.

    3. (c)

      CASS 13.2.5G(6) applies to an enhanced scope SMCR firm.

    4. (d)

      In addition, the firm may allocate the CASS FCA-prescribed senior management responsibility to an SMF manager who does not perform any other function coming within the FCA regime for SMF managers in SMCR firms. See SUP 10C.7 (Other overall responsibility function (SMF18)) and SUP 10C.8.1R (Other local responsibility function (SMF22)) for details. Where this is the case, the manager will be performing the other overall responsibility function or the other local responsibility function.

  8. (8)

    A firm may only give the function in CASS 13.2.3R to a director or senior manager. It is likely that an SMF manager will satisfy this condition. If the firm wants to give the function to someone else, it should make sure that it meets the requirements of CASS 13.2.3R as well as of the senior managers and certification regime.