CASS 8.1 Application
1This chapter applies to a firm (including in its capacity as trustee under CASS 5.4) in respect of any written authority from a client under which the firm may control a client's assets or liabilities in the course of, or in connection with, the firm's:
- (1)
designated investment business (including MiFID business); and
- (2)
insurance mediation activity, except where it relates to a reinsurance contract.
Mandates or similar authorities for the purpose of this chapter include a firm's authority over a client's safe custody account, for example for stock lending purposes, a firm's authority over a client's bank or building society account including direct debits in favour of the firm, and a firm holding a client's credit card details.
Firms are reminded that the mandate rules do not apply to an incoming EEA firm, other than an insurer, with respect to its passported activities. The application of the mandate rules is also dependent on the location from which the activity is undertaken (see CASS 1.3).2
Purpose
The mandate rules apply to those firms that control, rather than hold, clients' assets or are able to create liabilities in the name of a client. These rules seek to ensure that firms establish and maintain records and internal controls to prevent the misuse of the authority granted by the client.
General
A firm that holds authorities of the sort referred to in this chapter, must establish and maintain adequate records and internal controls in respect of its use of the mandates, which must include:
- (1)
an up-to-date list of the authorities and any conditions placed by the client or the firm's management on the use of them;
- (2)
a record of all transactions entered into using the authority and internal controls to ensure that they are within the scope of authority of the person and the firm entering into the transaction;
- (3)
the details of the procedures and authorities for the giving and receiving of instructions under the authority; and
- (4)
where the firm holds a passbook or similar documents belonging to the client,2 internal controls for the safeguarding (including against loss, unauthorised destruction, theft, fraud or misuse) of any passbook or similar document belonging to the client held by the firm.
2