CASS 1A.3 Responsibility for CASS operational oversight

CASS 1A.3.1RRP
  1. (1)

    A CASS small firm must allocate to a single6 director3 or senior manager3 of sufficient skill and authority6 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 an SMCR firm7 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

[Note: article 7, first paragraph of the MiFID Delegated Directive]6

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CASS 1A.3.1-AGRP

3The material in CASS 1A.3.1BG about how CASS 1A.3 fits into the FCA senior managers and certification7 regime for SMCR firms7 also applies to a CASS small firm that is an SMCR firm7 and the function in CASS 1A.3.1R. However:

  1. (1)

    the function in CASS 1A.3.1R is not a separate FCA certification function7; and

  2. (2)

    the person performing that function will not necessarily be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime: Certification regime)7.

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The approved persons regime and the certification regime3

CASS 1A.3.1ARRP

1A CASS medium firm and a CASS large firm must allocate to a single6 director or senior manager of sufficient skill and authority6 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.

[Note: article 7, first paragraph of the MiFID Delegated Directive]6

CASS 1A.3.1BGRP
  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 an SMCR firm. For an SMCR firm, 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. Paragraphs (1A) to (4) describe how CASS 1A.3.1AR applies to SMCR firms.7

      3
    3. (c)

      7However, nothing in paragraphs (1A) to (4) affects the requirement for the function in CASS 1A.3.1AR to be allocated to a single director or senior manager of sufficient skill and authority in accordance with CASS 1A.3.1AR and CASS 1A.3.2AR.

  2. (1A)

    7There are three elements of the regime for SMCR firms that are particularly relevant to CASS 1A, 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)).

  3. (2)
    1. (a)

      This paragraph (2) explains how CASS 1A.3.1AR applies to an SMCR firm to which SYSC 24 and SYSC 26 both apply.7

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    2. (b)

      The firm7 must allocate7 responsibility for the firm’s compliance with CASS to one of its SMF managers (see SYSC 24.2.1R7). That responsibility is an “FCA-prescribed senior management responsibility”. The full list of FCA-prescribed senior management responsibilities is in the table in SYSC 24.2.6R7.

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    3. (c)

      Although the CASS function in SYSC 24.2.1R is different from the function in CASS 1A.3.1AR, the firm7 may allocate the function in CASS 1A.3.1AR to the SMF manager in (b).3

      5
    4. (d)

      The firm7 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 FCA7 regime for SMF managers in SMCR firms7. See SUP 10C.7 (Other overall responsibility function (SMF18)) and SUP 10C.8.1R (Other local responsibility function (SMF22))7 for details. Where this is the case, the manager will be performing the other overall responsibility function or the other local responsibility function.7

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    5. (e)

      The firm7 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

      5
      1. (i)

        that person will be subject to the employee certification regime described in SYSC 27 (Senior managers and certification regime:7 (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 certification function in SYSC 27.8.1R.7

        3
  4. (3)

    In relation to an SMCR firm to which SYSC 24 applies but SYSC 26 does not apply, the guidance in sub-paragraphs (2)(b), (2)(c), and 2(e) applies, but the guidance in sub-paragraph (2)(d) does not apply.7

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  5. (4)
    1. (a)

      The position of an SMCR firm to which neither SYSC 24 nor SYSC 26 apply7 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. The function in CASS 1A.3.1AR will be the CASS oversight FCA certification function in SYSC 27.8.1R.7

      5
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CASS 1A.3.1CRRP

2If, at the time a firm that is not an SMCR firm7 becomes a CASS medium firm or a CASS large firm in accordance with CASS 1A.2.12R(1) or CASS 1A.2.12R(2)7, 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:

3
  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.3.1DGRP
  1. (1)

    3CASS 1A.3.1CR provides a grace period for a firm that is not an SMCR firm7 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 an SMCR firm7, 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 an SMCR firm7, it can be allocated to any director or senior manager who is already an approved person who is suitable to carry it out. However, if the firm wishes to allocate the function to someone as described in CASS 1A.3.1BG(2)(d), it will need to get FCA approval before the firm appoints them7.

  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 27 (Senior managers and certification regime:7 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.3.2ARRP

6Where a firm allocates the responsibilities in CASS 1A.3.1R or CASS 1A.3.1AR (“the CASS oversight responsibilities”) to a director or senior manager (“P”), the firm must not allocate any other responsibilities to P in addition to the CASS oversight responsibilities, unless the firm is satisfied on reasonable grounds that:

  1. (1)

    P will still be able to discharge the CASS oversight responsibilities effectively; and

  2. (2)

    the firm’s full compliance with CASS will not be compromised.

[Note: article 7, second paragraph of the MiFID Delegated Directive]

CASS 1A.3.2BRRP

6A firm may allow the CASS oversight responsibilities to be shared amongst one or more directors or senior managers where this is done as part of a job share between those persons.

CASS 1A.3.3RRP
  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.