Client Money and Assets (CASS)

Compliance with the FCA’s CASS rules continues to present challenges for firms, more than a decade on from the failure of Lehman Brothers.

Despite significant changes to the Client Assets Sourcebook since 2008, designed to increase the robustness of the regulatory requirements and protect investors in the event of insolvency, firms continue to be subject to rule breaches, and cases of regulatory enforcement, which suggest lessons have not been learnt. Simply put: compliance with the CASS rules does not appear to be getting any easier. 

With the implementation of the FRC Assurance Standard for CASS Audits in 2016, a further level of expectation was introduced which many firms are still grappling with today. The annual CASS audit is now very effective at highlighting technical non-compliance, but there remains an obvious gap around highlighting where client money and assets are actually at risk and ensuring that these risks are mitigating effectively. In response to the recent post-implementation review the FRC has announced a set of updates designed to address this at least in part.

Many CASS firms have responded to these latest challenges through increased technology expenditure on a broad range of solutions including CASS toolkits (to map rules, risks, and controls to processes), reconciliations tools, and robotic process automation (RPA). The objective here is not one of purely reducing costs, but rather to minimise operational risk, reduce manual controls, and ensure a full version history that can be easily audited.

Our latest survey highlights CASS firms’ biggest future challenge as the need to continually respond and adapt to business and regulatory changes. In a complex and changing world, compliance with the CASS rules is likely to be a constant obstacle for many firms.

Baringa’s commitment to CASS advisory work has been rewarded with impressive growth. Fundamental to this growth, has been a focus on enabling client success rather than ‘owning’ it. Our engagement model is unique in that we equip our clients for sustained improvement.

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