1This chapter (the debt management client money chapter) applies to a CASS debt management firm that receives or holds client money as set out in this chapter.

Subject to CASS 11.1.6 R, the rules and guidance in the debt management client money chapter apply to CASS large debt management firms, except where indicated otherwise in the relevant rule.

1. (1)

   An authorised professional firm regulated by the Law Society of England and Wales, the Law Society of Scotland or the Law Society of Northern Ireland that, with respect to its regulated activities, is subject to the following rules of its designated professional body, must comply with those rules and, if it does so, it will be deemed to comply with the debt management client money chapter.

2. (2)

   The relevant rules are:

   1. (a)

      if the firm is regulated by the Law Society of England and Wales, the SRA Accounts Rules 2011;

   2. (b)

      if the firm is regulated by the Law Society of Scotland, the Law Society of Scotland Practice Rules 2011; and

   3. (c)

      if the firm is regulated by the Law Society of Northern Ireland, the Solicitors' Accounts Regulations 1998.

1. (1)

   A CASS debt management firm must, once every year and by the time it is required to make a notification in accordance with CASS 11.2.4 R, determine whether it is a CASS large debt management firm or a CASS small debt management firm according to the amount of client money which it held during the previous year or, if it did not hold client money during the previous year, according to the amount of client money it projects to hold in the following year, in each case using the limits set out in the table in CASS 11.2.3 R.

2. (2)

   For the purpose of determining its 'CASS debt management firm type' in accordance with CASS 11.2.3 R, a CASS debt management firm must:

   1. (a)

      if it currently holds client money, calculate the highest total amount of client money held during the previous calendar year ending on 31 December and use that figure to determine its 'CASS debt management firm type';

   2. (b)

      if it did not hold client money in the previous calendar year but projects that it will do so in the current calendar year, calculate the highest total amount of client money that it projects that it will hold during that year and use that figure to determine its 'CASS debt management firm type'.

For the purpose of calculating the value of the total amounts of client money that it holds on any given day during a calendar year (in complying with CASS 11.2.1 R) a CASS debt management firm must base its calculation on accurate internal records of client money holdings. A CASS large debt management firm must do this using the internal reconciliations performed during the previous year that are prescribed in CASS 11.11.13 R. A CASS small debt management firm must use the records used in carrying out checks required of it under CASS 11.11.8 R1.

Once every calendar year, a CASS debt management firm must notify the FCA, in writing, of the information in (1), (2) or (3), as applicable, and the information in (4), in each case no later than the day specified in (1) to (4):

1. (1)

   if it held client money in the previous calendar year, the highest total amount of client money held during the previous calendar year, notification of which must be made no later than the fifteenth business day of January; or

2. (2)

   if it did not hold client money in the previous calendar year but at any point up to the fifteenth business day of January the firm projects that it will do so in the current calendar year, the highest total amount of client money that the firm projects that it will hold during the current calendar year, notification of which must be made no later than the fifteenth business day of January; or

3. (3)

   in any other case, the highest total amount of client money that the firm projects that it will hold during the remainder of the current calendar year, notification of which must be made no later than the business day before the firm begins to hold client money; and

4. (4)

   in every case, of its 'CASS debt management firm type' classification, notification of which must be made at the same time the firm makes the notification under (1), (2) or (3).

For the purpose of the annual notification in CASS 11.2.4 R, a CASS debt management firm must apply the calculation rule in CASS 11.2.2 R.

1. (1)

   Notwithstanding CASS 11.2.3 R, provided that the conditions in (2) are satisfied, a CASS debt management firm that would otherwise be classified as a CASS small debt management firm under the limits provided for in CASS 11.2.3 R may elect to be treated as a CASS large debt management firm.

2. (2)

   The conditions to which (1) refers are that in either case:

   1. (a)

      the election is notified to the FCA in writing;

   2. (b)

      the notification in accordance with (a) is made at least one week before the election is intended to take effect; and

   3. (c)

      the FCA has not objected.

A firm's 'CASS debt management firm type' and any change to it takes effect:

1. (1)

   if the firm notifies the FCA in accordance with CASS 11.2.4 R (1) or CASS 11.2.4 R (2), on 1 February following the notification; or

2. (2)

   if the firm notifies the FCA in accordance with CASS 11.2.4 R (3), on the day it begins to hold client money; or

3. (3)

   if the firm makes an election under CASS 11.2.7 R and provided the conditions in CASS 11.2.7 R (2) are satisfied, on the day the notification made under CASS 11.2.7 R (2)(a) states that the election is intended to take effect.

1. (1)

   A CASS small debt management firm, other than a not-for-profit debt advice body, must allocate to a director or senior manager1 responsibility for:1

   1. (a)

      oversight of the firm's operational compliance with CASS 11;1

   2. (b)

      reporting to the firm'sgoverning body in respect of that oversight; and1

   3. (c)

      completing and submitting a CCR005 return in accordance with SUP 16.12.29CR.1

2. (2)

   [deleted]4

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A CASS small debt management firm that is a not-for-profit debt advice body must allocate to a director or senior manager:

1. (1)

   oversight of the firm's operational compliance with CASS 11;

2. (2)

   reporting to the firm'sgoverning body in respect of that oversight; and

3. (3)

   completing and submitting a CCR005 return in accordance with SUP 16.12.29C R.

A CASS large debt management firm must allocate to a director or senior manager the function of:

1. (1)

   oversight of the operational effectiveness of that CASS debt management firm's systems and controls that are designed to achieve compliance with CASS 11;

2. (2)

   reporting to the CASS debt management firm'sgoverning body in respect of that oversight; and

3. (3)

   completing and submitting a CCR005 return to the FCA in accordance with SUP 16.12.29C R.

1. (1)

   Subject to (2), a CASS debt management firm must make and retain an appropriate record of the person to whom responsibility is allocated in accordance with, as applicable, CASS 11.3.1 R, CASS 11.3.2 R, and CASS 11.3.4 R.

2. (2)

   A CASS small debt management firm must make and retain such a record only where it allocates responsibility to a person other than the person in that firm who performs the compliance oversight function.

3. (3)

   A CASS debt management firm must ensure that a record made under this rule is retained for a period of five years after it is made.

Money ceases to be client money if:

1. (1)

   it is paid to the client, or a duly authorised representative of the client; or

2. (2)

   it is:

   1. (a)

      paid to a third party on the instruction of the client, or with the specific consent of the client; or

   2. (b)

      paid to a third party further to an obligation on the firm under any applicable law; or

3. (3)

   it is paid into an account of the client (not being an account which is also in the name of the firm) on the instruction, or with the specific consent, of the client;

4. (4)

   it is due and payable to the firm for its own account;

5. (5)

   it is paid to the firm as an excess in the client bank account (see CASS 11.11.12 R (2) and CASS 11.11.23 R (3)); or1

6. (6)

   it is transferred to a dormant asset fund operator under the applicable provisions of Part 1 of the Dormant Assets Act 2022 and in accordance with CASS 11.4.5R.1

When a CASS debt management firm draws a cheque or other payable order to discharge its fiduciary duty to the client, it must continue to treat the sum concerned as client money until the cheque or order is presented and paid.

1A firm may transfer a client money balance to a dormant asset fund operator under the applicable provisions of Part 1 of the Dormant Assets Act 2022. If it does so the transferred balance will cease to be client money under CASS 11.4.2R(6), provided that the firm can demonstrate it took reasonable steps to trace the client concerned and to return the balance prior to making such a transfer.

A CASS debt management firm must, when holding client money, make adequate arrangements to safeguard the client's rights and prevent the use of client money for its own account.

A CASS debt management firm must introduce adequate organisational arrangements to minimise the risk of the loss or diminution of client money, or of rights in connection with client money, as a result of misuse of client money, fraud, poor administration, inadequate record-keeping or negligence.

A CASS debt management firm receives and holds client money as trustee on the following terms:

1. (1)

   for the purposes and on the terms of the debt management client money rules and the debt management client money distribution rules;

2. (2)

   subject to (3), for the clients for whom that money is held, according to their respective interests in it;

3. (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. (4)

   after all valid claims and costs under (2) and (3) have been met, for the CASS debt management firm itself.

Before a CASS large debt management firm opens a client bank account and as often as is appropriate on a continuing basis (such frequency being no less than once in each financial year) it must take reasonable steps to establish that it is appropriate for the firm to hold client money at the approved bank concerned.

A CASS large debt management firm must consider the risks associated with holding all client money with one approved bank and should consider whether it would be appropriate to hold client money in client bank accounts at a number of different approved banks.

A CASS large debt management firm must make a record of the grounds upon which it satisfies itself as to the appropriateness of its selection of an approved bank. The firm must make the record on the date it makes the selection and must keep it from the date of such selection until five years after the firm ceases to use the approved bank to hold client money.

1. (1)

   For each client bank account, a CASS debt management firm must, in accordance with CASS 11.8.4 R, complete and sign a client bank account acknowledgement letter clearly identifying the client bank account, and send it to the approved bank with whom the client bank account is, or will be, opened, requesting the bank to acknowledge and agree to the terms of the letter by countersigning it and returning it to the firm.

2. (2)

   Subject to CASS 11.8.6 R, a CASS debt management firm must not hold or receive any client money in or into a client bank account unless it has received a duly countersigned client bank account acknowledgement letter from the approved bank that has not been inappropriately redrafted and clearly identifies the client bank account.

In drafting client bank account acknowledgement letters under CASS 11.8.2 R a CASS debt management firm is required to use the relevant template in CASS 11 Annex 1 R.

When completing a client bank account acknowledgement letter under CASS 11.8.2 R (1) a CASS debt management firm:

1. (1)

   must not amend any of the acknowledgement letter fixed text;

2. (2)

   subject to (3), must ensure the acknowledgement letter variable text is removed, included or amended as appropriate; and

3. (3)

   must not amend any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text.

1. (1)

   If, on countersigning and returning the client bank account acknowledgement letter to a firm, the relevant approved bank has also:

   1. (a)

      made amendments to any of the acknowledgement letter fixed text; or

   2. (b)

      made amendments to any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text;

   the client bank account acknowledgement letter will have been inappropriately redrafted for the purposes of CASS 11.8.2 R (2).

2. (2)

   Amendments made to the acknowledgement letter variable text, in the client bank account acknowledgement letter returned to a firm by the relevant approved bank, will not have the result that the letter has been inappropriately redrafted if those amendments do not affect the meaning of the acknowledgement letter fixed text, have been specifically agreed with the firm and do not cause the client bank account acknowledgement letter to be inaccurate.

A CASS debt management firm must use reasonable endeavours to ensure that any individual that has countersigned a client bank account acknowledgement letter that has been returned to the firm was authorised to countersign the letter on behalf of the relevant approved bank.

A CASS debt management firm must retain each countersigned client bank account acknowledgement letter it receives from the date of receipt until the expiry of a period of five years starting on the date on which the last client bank account to which the acknowledgment letter relates is closed.

A CASS debt management firm must also retain any other documentation or evidence it believes is necessary to demonstrate that it has complied with each of the applicable requirements in this section (such as any evidence it has obtained to ensure that the individual that has countersigned a client bank account acknowledgement letter1 that has been returned to the firm was authorised to countersign the letter on behalf of the relevant approved bank).

A CASS debt management firm must, periodically (at least annually, and whenever it becomes aware that something referred to in a client bank account acknowledgement letter has changed) review each of its countersigned client bank account acknowledgement letters to ensure that they remain accurate.

Whenever a CASS debt management firm finds a countersigned client bank account acknowledgement letter to contain an inaccuracy, the firm must promptly draw up a new replacement client bank account acknowledgement letter under CASS 11.8.2 R and ensure that the new client bank account acknowledgement letter is duly countersigned and returned by the relevant approved bank.

If a CASS debt management firm'sclient bank account is transferred to another approved bank, the firm must promptly draw up a new client bank account acknowledgement letter under CASS 11.8.2 R and ensure that the new client bank account acknowledgement letter is duly countersigned and returned by the relevant approved bank within 20 business days of the firm sending it to that person.

A CASS debt management firm must take all reasonable steps to ensure that all client money it receives is paid directly into a client bank account at an approved bank, rather than being first received into the firm's own account and then segregated.

A CASS debt management firm must ensure that client money is held in a client bank account at one or more approved banks.

Cheques received by a CASS debt management firm, made out to the firm, representing client money or a mixed remittance must be treated as client money from receipt by the firm.

Where a CASS debt management firm receives client money in the form of cash, a cheque or other payable order, it must:

1. (1)

   pay the money into a client bank account in accordance with CASS 11.9.1 R promptly and no later than on the business day after it receives the money;

2. (2)

   if the firm holds the money overnight, hold it in a secure location in line with Principle 10; and

3. (3)

   record the receipt of the money in the firm's books and records under the applicable requirements of CASS 11.11 (Records, accounts and reconciliations).

If a CASS debt management firm receives a mixed remittance it must:

1. (1)

   pay the full sum into a client bank account promptly and in accordance with CASS 11.9.1 R to CASS 11.9.5 R; and

2. (2)

   no later than one business day1 after the payment of the mixed remittance1 into the client bank account1 has cleared, pay the money that is not client money out of the client bank account.

1. (1)

   A CASS debt management firm must allocate in its books and records any client money it receives to an individual client promptly and, in any case, no later than five business days following the receipt.

2. (2)

   Pending a CASS debt management firm's allocation of a client money receipt to an individual client under (1), it must record the received client money in its books and records as "unallocated client money".

If a CASS debt management firm receives money (either in a client bank account or an account of its own) which it is unable immediately to identify as client money or its own money, it must:

1. (1)

   take all necessary steps to identify the money as either client money or its own money;

2. (2)

   if it considers it reasonably prudent to do so, given the risk that client money may not be adequately protected if it is not treated as such, treat the entire balance of money as client money and record the money in its books and records as "unidentified client money" while it performs the necessary steps under (1).

A CASS debt management firm must ensure that client money received by its appointed representatives, field representatives or other agents is:

1. (1)

   received directly into a client bank account of the firm; or

2. (2)

   if it is received in the form of a cheque or other payable order:

   1. (a)

      paid into a client bank account of the CASS debt management firm promptly and, in any event, no later than the next business day after receipt; or

   2. (b)

      forwarded to the firm or, in the case of a field representative, forwarded to a specified business address of the CASS debt management firm, to ensure that the money arrives at the specified business address promptly and, in any event, no later than the close of the third business day following the receipt of the money from the client; or

3. (3)

   if it is received in the form of cash, paid into a client bank account of the CASS debt management firm promptly and, in any event, no later than the next business day after receipt.

A CASS debt management firm must pay a client any interest earned on client money held for that client.

A CASS debt management firm must, on receipt of a written request to withdraw from a debt management plan, promptly return to the client any client money held by it for the client.

Where a CASS debt management firm receives client money from a client in relation to a debt management plan or for the purpose of distribution to the client's creditors, the firm must pay that money to creditors as soon as reasonably practicable, save in the circumstances in CASS 11.10.3 R.

The circumstances referred to in CASS 11.10.1 R are:

1. (1)

   the contract between the client and the CASS debt management firm expressly provides that client money might be held for more than five business days without being distributed to creditors;

2. (2)

   the existence of such a term expressly providing that client money might be held for more than five business days without being distributed to creditors has been separately brought to the attention of the client prior to his entering into the contract; and

3. (3)

   the CASS debt management firm has explained to the client the risks and implications, if any, of payment to creditors being delayed prior to the entry into the contract.

On each occasion that a CASS debt management firm receives client money from a client in relation to a debt management plan, or for the purpose of distribution to the client's creditors, and it is proposed not to make a client's payment to creditors within five business days of receipt of the client money in the circumstances described in CASS 11.10.3 R (1), it must:

1. (1)

   as soon as reasonably practicable and within the five business day period, inform the client's creditors of the fact that it has received client money from the client for the purpose of distribution to his or her creditors and that it will not distribute that client money to the creditors within the five business-day period; and

2. (2)

   perform daily reconciliations of the money held for the client concerned in accordance with the provisions of CASS 11.11.

On each occasion a CASS debt management firm receives client money from a client in relation to a debt management plan, or for the purpose of distribution to the client's creditors, and is unable for any reason other than in the circumstances described in CASS 11.10.3 R (1) to make a payment to the client's creditors within five business days of receipt, it must:

1. (1)

   inform the client of the delay and the reason for the delay;

2. (2)

   inform the client of the risks and implications of the late payments;

3. (3)

   inform the client's creditors of this delay as soon as reasonably practicable and within the period of five business days of the receipt of the relevant client money; and

4. (4)

   perform daily checks of its records of the money held for the client concerned in accordance with the provisions of CASS 11.11.

1. (1)

   Subject to (2), where a CASS debt management firm receives client money from a client in relation to a debt management plan or for the purpose of distribution to the client's creditors, and it fails to pay that money to creditors as soon as reasonably practicable following its receipt (see CASS 11.10.1 R and CASS 11.10.2 G), it must put the client into the financial position he would have been in had the delay not occurred.

2. (2)

   Paragraph (1) does not apply in the circumstances described in CASS 11.10.3 R or where the delay is due to circumstances beyond the firm's control.

A CASS debt management firm must keep such records and accounts as are necessary to enable it, at any time and without delay, to distinguish client money held for one client from client money held for any other client, and from its own money.

A CASS debt management firm must maintain its records and accounts in a way that ensures their accuracy and, in particular, their correspondence to the client money held for individual clients.

A CASS debt management firm must maintain up-to-date records that detail all payments to, from, or made on behalf of, clients and written and oral contact with clients and their creditors.

A CASS small debt management firm must undertake periodic checks of its internal accounts and records to ensure that the amount of money it holds in its client bank accounts is equal to the amount of client money that should be segregated under CASS 11.9.

In carrying out the checks required by CASS 11.11.8 R a CASS small debt management firm must use the values contained in its internal records and ledgers (for example, its cash book or other internal accounting records), rather than the values contained in the records it has obtained from approved banks with whom it has deposited client money (for example, bank statements).

Where the check of its internal records and accounts that a CASS small debt management firm is required to undertake under CASS 11.11.8 R reveals a difference between the amount of money it holds in its client bank accounts and the amount of client money that should be held and segregated under CASS 11.9, a CASS small debt management firm must:

1. (1)

   ensure that any shortfall in the amount held in its client bank accounts as compared to the amount that should be held there is made up by a prompt payment into the firm'sclient bank accounts;

2. (2)

   ensure that any excess in the amount held in its client bank accounts as compared to the amount that should be held there is promptly withdrawn from its client bank accounts; and

3. (3)

   ensure that any correction of a shortfall or excess of the kind referred to in (1) and (2) is carried out, at the latest, before the end of the business day following the day on which difference was discovered.

A CASS large debt management firm must, as regularly as is necessary, but no less often than every five business days, carry out a CASS large debt management firm internal client money reconciliation.

A CASS large debt management firm internal client money reconciliation requires a CASS large debt management firm to check whether its client money resource, as determined by CASS 11.11.16 R, on the previous business day, was at least equal to the client money requirement, as determined by CASS 11.11.17 R as at the close of business on that day.

In carrying out a CASS large debt management firm internal client money reconciliation, a CASS large debt management firm must use the values contained in its internal records and ledgers (for example, its cash book or other internal accounting records), rather than the values contained in the records it has obtained from approved banks with whom it has deposited client money (for example, bank statements).

The client money resource for client money held in accordance with CASS 11.11.14 R is the aggregate of the balances on the firm'sclient bank accounts, as at the close of business on the previous business day.

1. (1)

   The client money requirement is the sum of:

   1. (a)

      the aggregate of all individual client balances calculated in accordance with CASS 11.11.21 R and CASS 11.11.22 R;

   2. (b)

      the amount of any unallocated client money under CASS 11.9.7 R;

   3. (c)

      the amount of any unidentified client money under CASS 11.9.8 R; and

   4. (d)

      any other amounts of client money included in the calculation under (2).

2. (2)

   For the purposes of (1)(d), the CASS debt management firm must consider whether there are amounts of client money, other than those in (1)(a) to (c), to which the requirement to segregate applies and that it is appropriate to include in the calculation of its client money requirement and, if so, adjust the calculation accordingly.

The individual client balance for each client must be calculated as follows:

1. (1)

   the amount paid by the client to the CASS debt management firm; plus

2. (2)

   the amount of any interest, and any other sums, due to the client;

less:

1. (3)

   the aggregate of the amount of money:

   1. (a)

      paid back to that client; and

   2. (b)

      due and payable by the client to the CASS debt management firm; and

   3. (c)

      paid out to a third party for, or on behalf of, that client.

Where the individual client balance calculated in respect of an individual client under CASS 11.11.21 R is a negative figure (because the amounts paid by or due to a client under CASS 11.11.21 R (1) and CASS 11.11.21 R (2) are less than the amounts paid out or due and payable by that client under CASS 11.11.21 R (3), that individual client balance should be treated as zero for the purposes of the calculation of the firm'sclient money requirement in CASS 11.11.17 R.

When a CASS large debt management firm internal client money reconciliation reveals a difference between the client money resource and its client money requirement a CASS large debt management firm must:

1. (1)

   identify the reason for the difference;

2. (2)

   ensure that any shortfall in the amount of the client money resource as compared to the amount of the client money requirement is made up by a payment into the firm'sclient bank accounts by the end of the business day following the day on which difference was discovered; and

3. (3)

   ensure that any excess in the amount of the client money resource as compared to the amount of the client money requirement is withdrawn from the firm'sclient bank accounts by the end of the business day following the day on which the difference was discovered.

A CASS large debt management firm should perform a CASS large debt management firm external client money reconciliation:

1. (1)

   as regularly as is necessary; and

2. (2)

   no less frequently than the CASS large debt management firm internal client money reconciliations; and

3. (3)

   as soon as reasonably practicable after the date to which the reconciliation relates;

to ensure the accuracy of its internal accounts and records against those of approved banks with whom client money is deposited.

A CASS large debt management firm external client money reconciliation requires a CASS large debt management firm to conduct a reconciliation between its internal accounts and records and those of any approved banks by whom client money is held.

When any discrepancy is revealed by a CASS large debt management firm external client money reconciliation, a CASS large debt management firm must identify the reason for the discrepancy and correct it as soon as possible, unless the discrepancy arises solely as a result of timing differences between the accounting systems of the party providing the statement or confirmation and that of the firm.

While a CASS large debt management firm is unable to resolve a discrepancy arising from the CASS large debt management firm external client money reconciliation, and one record or a set of records examined by the firm during the reconciliation process indicates that there is a need to have greater amount of client money than is in fact the case, the firm must assume, until the matter is finally resolved, that the record or set of records is accurate and pay its own money into a relevant account.

A CASS debt management firm must inform the FCA in writing without delay if:

1. (1)

   its internal records and accounts of client money are materially out of date or materially inaccurate so that the firm is no longer able to comply with the requirements in CASS 11.11.1 R to CASS 11.11.4 R; or

2. (2)

   it becomes aware that, at any time in the preceding 12 months, the amount of client money segregated in its client bank accounts materially differed from the total aggregate amount of client money the firm was required to segregate in client bank accounts in accordance with the segregation requirements in CASS 11.9.

A CASS large debt management firm must inform the FCA in writing without delay if:

1. (1)

   after having carried out a CASS large debt management firm internal client money reconciliation in accordance with CASS 11.11.13 R it will be unable to, or materially fails to, pay any shortfall into (or withdraw any excess from) a client bank account so that the firm is unable to comply with CASS 11.11.23 R;

2. (2)

   after having carried out a CASS large debt management firm external client money reconciliation in accordance with CASS 11.11.25 R it will be unable to, or materially fails to, identify and correct any discrepancies in accordance with CASS 11.11.28 R;

3. (3)

   it will be unable to or materially fails to conduct a CASS large debt management firm internal client money reconciliation in compliance with CASS 11.11.13 R; or

4. (4)

   it will be unable to or materially fails to conduct a CASS large debt management firm external client money reconciliation in compliance with CASS 11.11.25 R.

A CASS debt management firm which holds client money must maintain at all times and be able to retrieve, in the manner described in this section, a CASS 11 resolution pack.

A CASS debt management firm must include within its CASS 11 resolution pack all those documents referred to in CASS 11.12.4 R.

The documents in CASS 11.12.3 R that a CASS debt management firm must include within its CASS 11 resolution pack are:

1. (1)

   a master document containing information sufficient to retrieve each document in the firm'sCASS 11 resolution pack;

2. (2)

   a document which identifies all the approved banks with whom client money may be deposited;

3. (3)

   a document which identifies each appointed representative, field representative or other agent of the firm which may receive client money in its capacity as the firm's agent;

4. (4)

   a document which identifies each senior manager and director and any other individual and the nature of their responsibility within the firm who is critical or important to the performance of operational functions related to any of the obligations imposed on the firm under the debt management client money rules;

5. (5)

   for all approved banks identified in (2) the written client bank account acknowledgement letters sent and received in accordance with CASS 11.8.2 R; and

6. (6)

   records relating to the internal and external client money checks it is required to carry out under CASS 11.11.

In relation to each document in a CASS debt management firm'sCASS 11 resolution pack a firm must:

1. (1)

   put in place adequate arrangements to ensure that an administrator, receiver, trustee, liquidator or analogous officer appointed in respect of it or any material part of its property is able to retrieve each document as soon as practicable and, in any event, within 48 hours of that officer’s appointment; and

2. (2)

   ensure that it is able to retrieve each document as soon as practicable and, in any event, within 48 hours where it has taken a decision to do so or as a result of an FCA request.

1. (1)

   A CASS debt management firm must ensure that it reviews the content of its CASS 11 resolution pack on an ongoing basis to ensure that it remains accurate.

2. (2)

   In relation to any change of circumstances that has the effect of rendering inaccurate, in any material respect, the content of a document specified in CASS 11.12.4 R, a firm must ensure that any inaccuracy is corrected promptly and in any event no more than five business days after the change of circumstances arose.

A CASS debt management firm must notify the FCA in writing immediately if it has not complied with, or is unable to comply with, CASS 11.12.2 R and CASS 11.12.6 R.

This section (the debt management client money distribution rules) applies to a CASS debt management firm that holds client money which is subject to the debt management client money rules when a primary pooling event or a secondary pooling event occurs.

A primary pooling event occurs:

1. (1)

   on the failure of a CASS debt management firm;

2. (2)

   on the vesting of assets in a trustee in accordance with an 'assets requirement' imposed under section 55P(1)(b) or (c) (as the case may be) of the Act where such a requirement is imposed in respect of all client money held by the firm.

If a primary pooling event1 occurs, then:2

1. (1)

   all client money:2

   1. (a)

      held in the CASS debt management firm'sclient bank accounts; and

   2. (b)

      received by the CASS debt management firm on behalf of a client but not yet paid into the firm'sclient bank accounts;

   is treated as pooled together to form a notional pool;

2. (2)

   a CASS debt management firm must calculate the amount it should be holding on behalf of each individual client as at the time of the primary pooling event using the method of calculating individual client balance provided for by CASS 11.11.21 R;

3. (3)

   a CASS debt management firm must decide whether it is in the best interests of its clients to transfer all its debt management activity business to another CASS debt management firm.

Where a primary pooling event1 occurs and the client money is not transferred to another firm in accordance with CASS 11.13.4 R, a CASS debt management firm must distribute client money comprising the notional pool so that each client2 receives a sum that is rateable to their entitlement to the notional pool calculated in CASS 11.13.4 R (2).

1. (1)

   3Subject to (2), as an alternative to distributing a client’sclient money to them under CASS 11.13.5R, a firm may transfer all of that client’sclient money to a dormant asset fund operator under the applicable provisions of Part 1 of the Dormant Assets Act 2022 and in accordance with CASS 11.4.5R.

2. (2)

   As a consequence of any such transfer to a dormant asset fund operator, the firm must not distribute to any other client an amount of money that would be less than that which such other client was entitled to have distributed under CASS 11.13.5R.

The remaining client money may be transferred under CASS 11.13.6 G only if it will be held by the transferee in accordance with the debt management client money chapter, including the statutory trust in CASS 11.6.1 R.

If there is a shortfall in the client money transferred under CASS 11.13.6 G then the client money must be allocated to each of the clients for whom the client money was held so that each client is allocated a sum which is rateable to that client's client money entitlement in accordance with CASS 11.13.4 R (2). This calculation may be done by either transferor or transferee in accordance with the terms of any transfer.

The transferee must, within seven days after the transfer of client money under CASS 11.13.6 G notify clients that:

1. (1)

   their money has been transferred to the transferee; and

2. (2)

   they have the option of having client money returned to them or to their order by the transferee, otherwise the transferee will hold the client money for the clients and conduct debt management activities for those clients.

1. (1)

   3This rule applies to a firm which, prior to a primary pooling event, had put in place contractual or other arrangements with a dormant asset fund operator of the sort described at section 23 of the Dormant Assets Act 2022.

2. (2)

   If, having attempted to, a firm is unable to distribute a balance of client money in accordance with CASS 11.13.5R to the relevant client, it must attempt to transfer the balance to a dormant asset fund operator under the applicable provisions of Part 1 of the Dormant Assets Act 2022 and in accordance with CASS 11.4.5R.

A secondary pooling event occurs on the failure of an approved bank at which a CASS debt management firm holds client money in a client bank account.

1. (1)

   Subject to (2), if a secondary pooling event occurs as a result of the failure of an approved bank where one or more client bank accounts are held then in relation to every client bank account of the firm, the provisions of CASS 11.13.12 R (1), CASS 11.13.12 R (2) and CASS 11.13.12 R (3) will apply.

2. (2)

   CASS 11.13.12 R does not apply if, on the failure of the approved bank, the CASS debt management firm pays to its clients, or pays into a client bank account at an unaffected approved bank, an amount equal to the amount of client money that would have been held if a shortfall had not occurred as a result of the failure.

Money held in each client bank account of the firm must be treated as pooled and:

1. (1)

   any shortfall in client money held, or which should have been held, in client bank accounts, that has arisen as a result of the failure of the approved bank, must be borne by all clients whose client money is held in a client bank account of the firm, rateably in accordance with their entitlements to the pool;

2. (2)

   a new client money entitlement must be calculated for each client by the firm, to reflect the requirements in (1), and the firm's records must be amended to reflect the reduced client money entitlement;

3. (3)

   the CASS debt management firm must make and retain a record of each client's share of the client money shortfall at the failedapproved bank until the client is repaid; and

4. (4)

   the firm must use the new client entitlements, calculated in accordance with (2), when performing the client money calculation in CASS 11.11.17 R.

The term 'which should have been held' is a reference to the failed approved bank's failure to hold the client money at the time of the pooling event.

Any interest earned on client money following a primary or secondary pooling event will be due to clients in accordance with CASS 11.9.11 R (Interest).

This annex consists only of one or more forms. Forms are to be found through the following address:

CASS debt management firm client bank account acknowledgment letter template - CASS 11 Annex 1 R