CASS 11.6 Statutory trust
A CASS debt management firm receives and holds client money as trustee on the following terms:
- (1)
for the purposes and on the terms of the debt management client money rules and the debt management client money distribution rules;
- (2)
subject to (3), for the clients for whom that money is held, according to their respective interests in it;
- (3)
on failure of the CASS debt management firm, for the payment of the costs properly attributable to the distribution of the client money in accordance with (2); and
- (4)
after all valid claims and costs under (2) and (3) have been met, for the CASS debt management firm itself.
Section 137B(1) of the Act provides that rules may make provisions which result in client money being held by a firm on trust. CASS 11.6.1 R creates such a rule in relation to client money held by a CASS debt management firm. The consequence of this rule is there is a fiduciary relationship between a CASS debt management firm and its client, under which client money is in the legal ownership of the firm but remains in the beneficial ownership of the client. In the event of failure of the CASS debt management firm, costs relating to the distribution of client money may have to be borne by the trust.