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CASS 1A.3 Responsibility for CASS operational oversight

CASS 1A.3.1R
  1. (1)

    A CASS small firm must allocate to a director3 or a senior manager3 responsibility for:3

    1. (a)

      oversight of the firm’s operational compliance with CASS; and3

    2. (b)

      reporting to the firm's governing body in respect of that oversight.3

  2. (2)

    A CASS small firm that is not a relevant authorised person must make the allocation in (1) to a director or senior manager who is approved to perform a significant influence function for that firm.3

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CASS 1A.3.1-AG

3The material in CASS 1A.3.1BG about how CASS 1A.3 fits into the FCA approved persons regime for relevant authorised persons also applies to a CASS small firm and the function in CASS 1A.3.1R. However:

  1. (1)

    the function in CASS 1A.3.1R is not an FCA specified significant-harm function; and

  2. (2)

    the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 5.2 (Certification Regime).

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The approved persons regime and the certification regime3

CASS 1A.3.1AR

1A CASS medium firm and a CASS large firm must allocate to a director or senior manager the function of:

  1. (1)

    oversight of the operational effectiveness of that firm’s systems and controls that are designed to achieve compliance with CASS;

  2. (2)

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

  3. (3)

    completing and submitting a CMAR to the FCA in accordance with SUP 16.14.

CASS 1A.3.1BG
  1. (1)
    1. (a)

      CASS 1A.3.1AR describes the FCA controlled function known as the CASS operational oversight function (CF10a). The table of FCA controlled functions3 in SUP 10A.4.4R3 together with SUP 10A.7.9R3 specify the CASS operational oversight function as an FCA required function4 for a firm to which CASS 1A.3.1AR applies.3

    2. (b)

      The CASS operational oversight function does not apply to a relevant authorised person.3

  2. (2)
    1. (a)

      For a firm that is a UK relevant authorised person5, the function in CASS 1A.3.1AR is not a separate controlled function and performing that function does not require approval as an approved person.3

    2. (b)

      A UK relevant authorised person5 must allocate overall responsibility for the firm’s compliance with CASS to one of its SMF managers (see SYSC 4.7.5R). That responsibility is an “FCA-prescribed senior management responsibility”. The full list of FCA-prescribed senior management responsibilities is in the table in SYSC 4.7.7R.3

    3. (c)

      A UK relevant authorised person5 may allocate the function in CASS 1A.3.1AR to the SMF manager in (b).3

    4. (d)

      A UK relevant authorised person5 may allocate the CASS FCA-prescribed senior management responsibility described in (b) to an SMF manager who does not perform any other function coming within the FCA approved persons regime for relevant authorised persons. See SUP 10C.7 (Other overall responsibility function (SMF18)) for details.3

    5. (e)

      A UK relevant authorised person5 may choose to allocate the function in CASS 1A.3.1AR to someone who is not an approved person and SMF manager. If so:3

      1. (i)

        that person will be subject to the employee certification regime described in SYSC 5.2 (Certification Regime);3

      2. (ii)

        that person will be subject to supervision by the SMF manager in (b); and3

      3. (iii)

        the function in CASS 1A.3.1AR will be the CASS oversight FCA specified significant-harm function in SYSC 5.2.32R.3

  3. (3)

    Broadly speaking, paragraph (2) applies to a third-country relevant authorised person, with certain differences:5

    1. (a)

      SYSC 4.8.6R and SYSC 4.8.9R apply instead of SYSC 4.7.5R and SYSC 4.7.7R;5

    2. (b)

      SUP 10C.8 applies instead of SUP 10C.7;5

    3. (c)

      the other local responsibility function (SMF22) applies in place of the other overall responsibility function (SMF18).5

  4. (4)
    1. (a)

      The position of an incoming EEA firm that has a top-up permission is slightly different.5

    2. (b)

      The firm may choose to allocate the function in CASS 1A.3.1AR to an SMF manager.5

    3. (c)

      The firm may instead choose to allocate the function in CASS 1A.3.1AR to someone who is not an SMF manager.5

    4. (d)

      Where (c) applies, the person performing the function in CASS 1A.3.1AR will fall into the certification regime.5

    5. (e)

      FCA-prescribed senior management responsibilities do not apply to an incoming EEA firm that has a top-up permission. There is no requirement in SYSC 4.7 or SYSC 4.8 that an SMF manager in an incoming EEA firm should have overall responsibility for CASS.5

    6. (f)

      Having responsibility for CASS may fall within the scope of the EEA branch senior manager function (SMF21).5

    7. (g)

      However, having responsibility for CASS may not fall into any controlled function.5

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CASS 1A.3.1CR

2If, at the time a firm that is not a relevant authorised person 3becomes a CASS medium firm or a CASS large firm in accordance with CASS 1A.2.12 R (1) or CASS 1A.2.12 R (2), the firm is not able to comply with CASS 1A.3.1A R because it has no director or senior manager who is an approved person in respect of the CASS operational oversight function, the firm must:

  1. (1)

    take the necessary steps to ensure that it complies with CASS 1A.3.1A R as soon as practicable, which must at least include submitting an application for a candidate in respect of the CASS operational oversight function within 30 business days of the firm becoming a CASS medium firm or a CASS large firm; and

  2. (2)

    until such time as it is able to comply with CASS 1A.3.1A R, allocate to a director performing a significant influence function or a senior manager performing a significant influence function responsibility for:

    1. (a)

      oversight of the firm's operational compliance with CASS;

    2. (b)

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

    3. (c)

      completing and submitting the CMAR to the FCA in accordance with SUP 16.14.

CASS 1A.3.1DG
  1. (1)

    3CASS 1A.3.1CR provides a grace period for a firm that is not a relevant authorised person to apply for someone to be approved to perform the CASS operational oversight function.

  2. (2)

    There is no equivalent to CASS 1A.3.1CR for a relevant authorised person, because a person does not need specific FCA approval before carrying out the function. This is explained in (3) to (5), below.

  3. (3)

    As explained in CASS 1A.3.1BG(2), the function in CASS 1A.3.1AR is not, by itself, a controlled function.

  4. (4)

    Therefore, if an approved person is to perform the function for a relevant authorised person, it can be allocated to any director or senior manager who is already an approved person who is suitable to carry it out.

  5. (5)

    If the function is to be carried out by a certification employee:

    1. (a)

      FCA approval is not needed because performance of a role that falls into the certification regime does not require FCA approval;

    2. (b)

      the firm should:

      1. (i)

        either issue them with a certificate under SYSC 5.2 (Certification regime) before the firm becomes a CASS medium firm or a CASS large firm; or

      2. (ii)

        give the function to a suitable approved person pending issue of the certificate.

CASS 1A.3.2R

[deleted]1

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CASS 1A.3.3R
  1. (1)

    Subject to (2), a firm must make and retain an appropriate record of the person to whom responsibility is allocated in accordance with CASS 1A.3.1 R, CASS 1A.3.1A R or CASS 1A.3.1C R (2)2.1

  2. (2)

    A CASS small firm must make and retain such a record only where it allocates responsibility to a person other than the person in that firm who performs the compliance oversight function.

  3. (3)

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