Client Assets (CASS) and Safeguarding

Client Assets (CASS) and Safeguarding
Client Assets (CASS) and Safeguarding

Body

Firm’s must segregate the assets, monies and relevant funds of clients such that in the event of an insolvency, those monies, assets and relevant funds are clearly identifiable as belonging to clients and avoid being placed into the pot of assets available to general creditors.

Protiviti provides Client Assets and Safeguarding advice and guidance through review of clients’ governance, systems and controls, reporting arrangements, assessments of their compliance with relevant regulations, guidelines and understanding of best practice, and provision of advice as to how they might improve or address any gaps/weaknesses. In these reviews we often use our own CASS and Safeguarding capability maturity model to help make these assessments and to show clients where and how to improve. We have developed an experienced and diverse team with the 1st, 2nd, and 3rd line experience.

The rules that we focus on are the FCA handbook ‘CASS’, MIFID2 for European firms, PSD and the E-money regulations for payment/e-money firms.

CASS

CASS obligations are ongoing with the emerging issues requiring ongoing attention. Topical areas Protiviti offers include, but not limited to: 

  • Temporary permissions and CASS Framework health check
  • Preparation for CASS external audit and post-audit remediation
  • Change Management
  • Oversight of the TPAs
  • CASS IT Controls and Overshirt 
  • Risk and Control Self-Assessment (RCSA) and CASS Framework review and automation
  • Review of the 3 Lines of Defence (3LOD)
  • Internal Audit
  • CASS Training
  • Section 166 - Protiviti have been appointed to the Skilled Person Panel for Client Assets.

Safeguarding

Safeguarding regulation is relatively new and evolving, requiring consulting, external and internal audit. E-money and PSR firms should act Now – the FCA expects Safeguarding frameworks to be in place and first audit opinions submitted. Topical areas Protiviti offers include:

  • Annual External Audit on Safeguarding Arrangements
  • Safeguarding audit preparation (health check) and post-audit remediation
  • Review/implementation of the Safeguarding Framework
  • Safeguarding reconciliation and calculation review
  • Oversight, automation and controls review

Following a consultation in May 2020, the FCA released additional guidance for payment and e-money firms on 9 July 2020 in respect of safeguarding customers’ funds. In January 2021 the FCA released a further consultation which reaffirmed that the conditions of authorisation for Payment Institutions and Electronic Money Institutions require them to satisfy to the FCA that they have robust governance arrangements. As part of satisfying the FCA that these regulated institutions have such arrangements, the FCA expect firms that need to arrange audits of their annual accounts under the Companies Act 2006 to arrange specific annual audits of their compliance with the safeguarding requirements under the PSRs/EMRs.

The sectors in which we specialise in providing Client Assets and Safeguarding advice and where we have expertise and experience are:

  • Investment Banking
  • Asset and Wealth management
  • Securities trading/stock broking
  • Insurance broking
  • Payments and e-money industry

Work We Do

tier 1 bank

Tier 1 Bank

We reviewed the impact of its CASS compliance of an end-to-end liquidity solution developed at the bank. Based on the results of our impact analysis, we helped build effective controls within then target operating model to ensure compliance with the relevant rules.

Asset managers

Asset managers

For a Global Asset Manager we developed enhanced management information to comply with the FCA’s CASS reporting requirements and reviewed the firm’s operations team in their work to resolve historic unresolved differences on client account reconcilliations.

Wealth Managers

Wealth Managers

Performed a Section 166 review to provide an opinion on the design and operation of a Wealth Manager’s internal control environment applicable to its handling and control of client money, safeguarding and administration of assets.

Insurance brokers

Insurance brokers

We provide advice and assistance on an ongoing basis regarding the application and implementation of CASS 5 rules to the client’s business and its processes.

Payments business

Payments business

We diagnosed a number of gaps and weaknesses in the client’s safeguarding arrangements and supported management and staff to address each appropriately – this included supporting the creation of a risk and control matrix, advising on segregation of duties, the design and implementation of changes to enhance the quality of reconciliation and preventing the comingling of funds.