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CASS 13.9 Discharge of fiduciary duty

CASS 13.9.1G

1CASS 13 provides important safeguards for the protection of client money held by firms that sit alongside the fiduciary duty owed by firms in relation to client money. CASS 13.9.2R to 13.9.3R provide for when money ceases to be client money for the purposes of CASS 13 and the fiduciary duty which firms owe to clients in relation to client money.

CASS 13.9.2R

1Money ceases to be client money if:

  1. (1)

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

  2. (2)

    it is:

    1. (a)

      paid to a third party on the instruction of the customer, or with the specific consent of the customer; 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 customer (not being an account which is also in the name of the firm) on the instruction, or with the specific consent, of the customer; or

  4. (4)

    it is due and payable to the firm for its own account (see CASS 13.7.1R to 13.7.2G); or

  5. (5)

    it is paid to the firm as an excess in the client bank account (see CASS 13.10.15R(3)); or2

  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 13.9.4R.2

CASS 13.9.3R

1When a 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.

Transfers of client money to a dormant asset fund operator under Part 1 of the Dormant Assets Act 2022

CASS 13.9.4R

2A 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 13.9.2R(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.

CASS 13.9.5E
  1. (1)

    2Taking reasonable steps in CASS 13.9.4R includes following this course of conduct:

    1. (a)

      determining, as far as reasonably possible, the correct contact details for the relevant client;

    2. (b)

      writing to the client at the last known address either by post or by electronic mail to inform it of the firm’s intention to no longer treat the client money balance as client money and to transfer the sums concerned to a dormant asset fund operator if the firm does not receive instructions from the client within 28 days (naming the specific relevant dormant asset fund operator);

    3. (c)

      where the client has not responded after the 28 days referred to in (b), attempting to communicate the information set out in (b) to the client on at least one further occasion by any means other than that used in (b) including by post, electronic mail, telephone or media advertisement;

    4. (d)

      subject to (e) and (f), where the client has not responded within 28 days following the most recent communication, writing again to the client at the last known address either by post or by electronic mail to inform them:

      1. (i)

        that, as the firm did not receive a claim for the relevant client money balance, it will in 28 days transfer the balance to a dormant asset fund operator (naming the specific relevant dormant asset fund operator); and

      2. (ii)

        of the steps that they must take to make a repayment claim;

    5. (e)

      if the firm has carried out the steps in (b) or (c) and in response has received positive confirmation in writing that the client is no longer at a particular address, the firm should not use that address for the purposes of (d);

    6. (f)

      if, after carrying out the steps in (a), (b) and (c), the firm has obtained positive confirmation that none of the contact details it holds for the relevant client are accurate or, if utilised, the communication is unlikely to reach the client, the firm does not have to comply with (d); and

    7. (g)

      waiting a further 28 days following the most recent communication under this rule before transferring the balance to the dormant asset fund operator.

  2. (2)

    Compliance with (1) may be relied on as tending to establish compliance with CASS 13.9.4R.

  3. (3)

    Contravention of (1) may be relied on as tending to establish contravention of CASS 13.9.4R.

CASS 13.9.6G
  1. (1)

    2Unless the firm has failed and CASS 13.3.1R(3) applies, any costs associated with a firm ceasing to treat unclaimed client money balances as client money pursuant to CASS 13.9.4R should be paid for from the firm’s own funds.

  2. (2)

    When transferring a client money balance to a dormant asset fund operator under the applicable provisions of Part 1 of the Dormant Assets Act 2022, a firm will need to consider its obligations under any contractual or other arrangements of the sort described at section 23 of the Dormant Assets Act 2022 in addition to meeting its obligations under the claims management client money rules and the claims management client money distribution rules.