Wed, Jan 20, 2016

Client Assets: New Year's Resolutions

As we enter 2016, senior management is once again faced with an ever-changing regulatory landscape and the need to devote significant time, resources and cost to comply with the multitude of new regulations and regulatory expectations.

Since the collapse of Lehman Brothers and the introduction of the Financial Conduct Authority’s (FCA) Client Assets Unit, the FCA has put an ever increasing focus on both CASS compliance and the wider CASS governance framework. Whilst there have been significant CASS rule changes following the issuance of PS14/9, the principles of adequate protection of client assets remain unchanged.

It is axiomatic that five years on, firms are continuing to fall foul of CASS compliance. In 2014, the FCA made 561 decisions with respect of CASS of which 269 resulted in more investigation or further action. Furthermore, in the first half of 2015, over 25% of all Section 166 reports related to client assets.

Whilst all areas of CASS compliance and good governance are necessary, we see the following areas as key focal points and risks for the FCA in 2016:

  • The accurate and timely reporting of data via the CMAR
  • The ongoing content, maintenance and structure of the CASS RP
  • The skills, resources and oversight effectiveness of the CF10a
  • The level of engagement and challenge of the Board/Governing Body and the quality and effectiveness of the Management Information
  • The adequacy of Compliance Monitoring and Internal Audit and the level of CASS technical skills to effectively monitor the business
  • The clarity of ownership and responsibility for CASS

Ultimately, the protection of client assets should be sacrosanct to our global economy and the FCA will continue to focus on this area over the coming year.

Financial Services Compliance and Regulation

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