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FCA Consults on Changes To Client Assets Sourcebook

On August 1, the UK Financial Conduct Authority (FCA) published a consultation paper (CP), outlining proposals to amend its Client Assets Sourcebook (CASS). CASS applies to certain regulated firms that hold client money in relation to investment business.

 The FCA stated in the CP that some investment firms are experiencing difficulty depositing client money at banks in accordance with CASS requirements. The proposals in the CP are intended to address the potential harm to consumers resulting from this, including client money being returned to clients against their wishes or being deposited with banks that do not meet due diligence requirements.

The FCA is seeking feedback on the following proposed changes to CASS:

  • permitting a firm to deposit an appropriate proportion of client money in an unbreakable deposit of a maximum of 90 days, as opposed to the current maximum of 30 days;
  • requiring a firm to comply with certain conditions, including producing related written policies, when it deposits client money in an unbreakable deposit of 31–90 days; and
  • requiring CASS medium and large firms to report client money in an unbreakable deposit of 31–90 days in their client money and asset return (CMAR) (monthly reporting of held client assets).

The CP consultation closes November 1.

The CP is available here.

©2018 Katten Muchin Rosenman LLP


About this Author

Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of financial services groups, and structuring and marketing of investment funds. Neil is a frequent speaker at industry conferences regarding developments in UK financial services regulation, including the AIFM Directive, short selling and market abuse.