1. (1)

   1Subject to (2) and (3), this2 chapter applies to a firm to which either or both of CASS 6 (Custody rules) and CASS 7 (Client money rules) applies.

   2
2. (2)

   In relation to a firm to which CASS 5 (Client money: insurance mediation activity) and CASS 7 (Client money rules) apply, this chapter does not apply in relation to client money that a firm holds in accordance with CASS 5.

3. (3)

   The rules and guidance in CASS 1A.2 apply to a firm even if at the date of the determination or, as the case may be, the notification, either or both of CASS 6 and CASS 7 do not apply to it, provided that:

   1. (a)

      either or both of those chapters applied to it during part or all of the previous calendar year; or

   2. (b)

      it projects that either or both will apply to it in the current calendar year.2

1. (1)

   A firm must once every year, and within the time limit provided for by CASS 1A.2.9R (4), determine whether it is a CASS large firm, CASS medium firm or a CASS small firm according to the amount of client money or safe custody assets which it holds, using the limits set out in the table in CASS 1A.2.7 R.

2. (2)

   For the purpose of determining its ‘CASS firm type’ in accordance with CASS 1A.2.7 R, a firm must:

   1. (a)

      if it currently holds client money or safe custody assets, calculate the higher of the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year ending on 31 December and use that figure to determine its ‘CASS firm type’;

   2. (b)

      if it did not hold client money or safe custody assets in the previous calendar year but projects that it will do so in the current calendar year, calculate the higher of the highest total amount of client money and the highest total value of safe custody assets that it projects that it will hold during that year and use that figure to determine its ‘CASS firm type’; but

   3. (c)

      in either case, exclude from its calculation any client money held in accordance with CASS 5 (Client money: insurance mediation activity).

For the purpose of calculating the value of the total amounts of client money and safe custody assets that it holds on any given day during a calendar year a firm must:

1. (1)

   in complying with CASS 1A.2.2R (2)(a), base its calculation upon internal reconciliations performed during the previous year;

2. (2)

   in relation to client money or safe custody assets denominated in a currency other than sterling, translate the value of that money or that safe custody assets into sterling at the previous day’s closing spot exchange rate; and

3. (3)

   in relation to safe custody assets only, calculate their total value using the previous day’s closing mark to market valuation, or if in relation to a particular safe custody asset none is available, the most recent available valuation.

1. (1)

   Notwithstanding CASS 1A.2.2 R, provided that the conditions in (2) are satisfied a firm may elect to be treated:

   1. (a)

      as a CASS medium firm, in the case of a firm that is classed by the application of the limits in CASS 1A.2.7 R as a CASS small firm; and

   2. (b)

      as a CASS large firm, in the case of a firm that is classed by the application of the limits in CASS 1A.2.7 R as a CASS medium firm.

2. (2)

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

   1. (a)

      the election is made by including it in the notice to the FSA provided under CASS 1A.2.8 R or CASS 1A.2.9 R;

   2. (b)

      it is given at least one week before the election is intended to take effect; and

   3. (c)

      the FSA has not objected.

In relation to the calendar year ending on 31 December 2011, a firm must notify the FSA in writing:

1. (1)

   by 31 January 2011 of the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year, if it held client money or safe custody assets in that previous year; or

2. (2)

   by 31 January 2011 of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during 2011, if it did not hold client money or safe custody assets in the previous calendar year but at the date of its notification to the FSA projects that it will do so in 2011; or

3. (3)

   in any other case, before the date on which the firm begins to hold client money or safe custody assets, of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the remainder of 2011; and

4. (4)

   in every case, of its ‘CASS firm type’ classification.

2In addition, in relation to the calendar year ending on 31 December 2011, a CASS small firm must by 31 July 2011 notify the FSA in writing of:

1. (1)

   the highest total amount of client money and the highest total value of safe custody assets held during the period between 1 January 2011 and 30 June 2011; or

2. (2)

   if it did not hold client money or safe custody assets in that period, the highest total amount of client money and the highest total value of safe custody assets that the firm projects, as at the date of its notification to the FSA under this rule, it will hold between 1 July 2011 and 31 December 2011.

In relation to each calendar year beginning with that which ends on 31 December 2012, a firm must notify the FSA in writing:

1. (1)

   within 15 business days of 31 December of the previous calendar year, of the highest total amount of client money and the highest total value of safe custody assets held during the previous calendar year, if it held client money or safe custody assets in that previous calendar year; or

2. (2)

   within 15 business days of 31 December of the previous year, of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the then current calendar year, if it did not hold client money or safe custody assets in the previous calendar year but at the date of its notification to the FSA projects that it will do so in the then current calendar year; or

3. (3)

   in any other case,before the date on which the firm begins to hold client money or safe custody assets, of the highest total amount of client money and the highest total value of safe custody assets that the firm projects that it will hold during the remainder of the then current calendar year; and

4. (4)

   in every case, of its ‘CASS firm type’ classification.

For the purpose of the annual notification to which CASS 1A.2.8 R and CASS 1A.2.9 R refer, and for the purpose of the notification to which CASS 1A.2.8A R refers,2 a firm must apply the calculation rule in CASS 1A.2.3 R.

A firmCASS small firm1 must allocate to a director performing a significant influence function or a senior manager performing a significant influence function responsibility for:

1. (1)

   oversight of the firm’s operational compliance with CASS;

2. (2)

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

3. (3)

   completing and submitting a CMAR to the FSA in accordance with SUP 16.14.

1A CASS medium firm and a CASS large firm must allocate to a director or senior manager the function of:

1. (1)

   oversight of the operational effectiveness of that firm’s systems and controls that are designed to achieve compliance with CASS;

2. (2)

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

3. (3)

   completing and submitting a CMAR to the FSA in accordance with SUP 16.14.

1. (1)

   Subject to (2), a firm must make and retain an appropriate record of the person to whom responsibility is allocated in accordance with CASS 1A.3.1 R or CASS 1A.3.1A R.1

2. (2)

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