CASS Policy Statement PS14/9

CASS Policy Statement PS14/9

The Financial Conduct Authority (FCA) published Policy Statement PS14/9 on 10 June 2014.


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In June 2014, the FCA published the policy statement 14/9 (PS14/9). The policy statement detailed updates to the Client Assets (CASS) rules, following on from the Consultation Paper 13/5 (CP13/5) which was published by the FCA in July 2013.

The new rules are set to be implemented in 3 waves:

  • 1 July 2014  (rules now in force)   
  • 1 December 2014   
  • 1 June 2015 

What this means for you

Many firms face significant challenges to implement the changes necessary to address PS14/9's requirements over the next twelve months. Implementing these changes is likely to require significant focus from senior management, including board members, CASS operational oversight officers and those charged with governance for CASS. This is in line with the wider trend to increase accountability within the financial services industry through proposals such as the Parliamentary Commission on Banking Standard's report on changing banking for good.

Below are the key themes that provide common threads of emphasis across the PS14/9:

  • Governance: The new rules will require firms to reassess how and where CASS compliance risks arise within the organisation, and for management to consider whether their current governance and oversight arrangements are sufficient to meet these risks.   
  • Funding: The new rules could present significant funding implications for firms. Specific areas which impose additional funding requirements include cash buffers, immediate segregation, shortfall funding and the DvP Collective Investment Schemes (CIS) window.   
  • Business model and organisational arrangements: Many of the new requirements will require firms to review their existing business model and organisational arrangements to confirm how and where the CASS rules do or do not apply.   
  • Record keeping: Under both CASS 6 and CASS 7, firms are required to maintain their own records (emphasis placed on having client specific level records)of client money and assets held. These records are based on the firm's own internal information and should not be derived from third party or external information. PS14/9 also focuses on maintaining records of policies and decisions and changes to reconciliations.    
  • Contracts: The Policy Statement emphasises the need for transparency and clarity in contractual arrangements, both those between the firm and its clients and those with third party banks and custodians. In up to a dozen areas the new rules set out changes that could result in the need to repaper agreements.

What happens next?

Firms have very little time to meet the new requirements.  The significant changes to operating models, record keeping and contractual arrangements affect many areas of an organisation. Firms will need to implement strong governance and control disciplines to ensure that the required changes are made correctly and within the necessary timeframes. These changes represent a challenge but also an opportunity for firms to re-evaluate the appropriateness and efficiency of their processes.

How KPMG can help

We are working with a number of firms to assess the specific impact of these changes to their businesses. KPMG professionals can assist with:    

  • High-level impact analysis: Identifying key areas for management focus based on a firm's current operating model.     
  • Gap analysis: Identifying specific areas in the systems, processes and contractual arrangements where change may be needed.   
  • Project planning: Developing a project plan to implement changes necessary to help address gaps to achieve compliance.   
  • Project implementation: Developing and implementing systems based solutions and enhanced target operating models.

Further insights

We would be very interested in discussing the impact these changes have on your firm.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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