BBA Seeks Clarification on CASS RP from FSA

On 3 September 2012, the British Bankers’ Association (“BBA”) published a letter to the Client Assets Unit of the FSA seeking clarification with respect to several sections of the recently finalised CASS Resolution Pack rules contained within Chapter 10 of the FSA’s Client Assets Sourcebook, specifically:

  • CASS 10.3.1(11): Retail and Professional Agreements – whether a firm is permitted to include in its CASS RP only those agreements relating to clients where money or assets are actually held, or alternatively whether all agreements for all investment business clients should be included within the CASS RP;
  •  CASS 10.1.16R: FSA Notification – whether there is some concept of ‘materiality’ behind the requirement to notify the FSA immediately if a firm has not complied with, or is unable to comply with, the requirement to maintain and be able to retrieve a CASS Resolution Pack, or alternatively whether all breaches, no matter how small, must be notified to the FSA;
  • CASS 10.1.9E(2): Reliance on CASS Systems – under this rule, firms are obliged to put in place arrangements to ensure that systems upon which the firm is reliant for the performance of its CASS RP obligations remain operational and accessible after insolvency.  Noting the difficulty in securing the legal enforceability of this type of clause, the BBA asks for clarification as to whether a firm can instead rely on Section 14 of the Investment Bank Special Administration Regulations 2011 on Continuity of Supply, which obliges suppliers of key services to continue to supply those services to the administrator of a firm;
  • CASS 10.1.11R(2): Correction of Inaccuracies – this rule requires correction of inaccuracies within a CASS RP within 5 business days of the inaccuracy occurring.  The BBA seeks clarification as to whether the reference in the regulations to “material” implies that the FSA is only concerned with the correction of errors or mistakes, or alternatively whether it requires prompt updating of the entire CASS RP.  The BBA also seeks guidance on what is to be considered “material”, and an explanation of why 5 business days has been chosen as the applicable updating period instead of “…a more workable ‘monthly’ basis…”;
  • CASS 10.2.1R(3): Representatives and Agents – this rule requires the firm to identify each appointed representative, tied agent, field representative or other agent of the firm which receives client money or safe custody assets.  The BBA is seeking clarification of what is meant by “other agents”; and
  • CASS 10.2.1(6): CASS RP Affiliates and Third Parties – this rule requires a firm to identify group members and third parties “involved in operational functions relating to any obligations imposed on the firm under CASS 6 or CASS 7”.  The BBA is seeking clarification with respect to the meaning of the phrase “…operational functions…” together with examples of the types of third parties to which the regulation would apply.
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