Related provisions for CASS 1.1.1

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CASS 1.2.1GRP
The rules in CASS 1.2 set out the maximum scope of this sourcebook. The application of CASS is modified for certain activities by CASS 1.4. Also particular chapters or sections of CASS may have provisions which limit their application.
CASS 1.2.2RRP
CASS applies to every firm, except as provided for in CASS 1.2.3 R, with respect to the carrying on of:(1) all regulated activities except to the extent that a provision of CASS provides for a narrower application; and(2) unregulated activities to the extent specified in any provision of CASS.
CASS 1.2.3RRP
CASS does not apply to:(1) an ICVC; or(2) an incoming EEA firm other than an insurer, with respect to its passported activities; or(3) a UCITS qualifier.
CASS 1.2.4RRP
With the exception of this chapter and the insurance client money chapter, CASS does2 not apply to:2(1) an authorised professional firm with respect to its non-mainstream regulated activities; or(2) the Society.
CASS 1.2.7GRP
(1) The approach in CASS is to ensure that the rules in a chapter are applied to firms in respect of particular regulated activities or unregulated activities.(2) The scope of the regulated activities to which CASS applies is determined by the description of the activity as it is set out in the Regulated Activities Order. Accordingly, a firm will not generally be subject to CASS in relation to any aspect of its business activities which fall within an exclusion found in the Regulated
CASS 1.2.8GRP
(1) CASS applies directly in respect of activities conducted with or for all categories of clients.22(2) [deleted]52225(3) The insurance client money chapter2 does not generally distinguish between different categories of client. However, the term consumer4is used for those to 4whom additional obligations are owed, rather than the term retail client.2 This is to be consistent with the client categories used in 1the Insurance: New Conduct of Business sourcebook4.2424(4) Each provision
CASS 1.2.13GRP
2A firm may opt to hold under a single chapter money that would otherwise be held under different chapters (see CASS 5.1.1 R (3) and CASS 7.1.3 R5).555
CASS 1.4.1RRP
In the case of OPS activity undertaken by an OPS firm, CASS applies with the following general modifications:(1) references to customer are to the OPS or welfare trust, whichever fits the case, in respect of which the OPS firm is acting or intends to act, and with or for the benefit of which the relevant activity is to be carried on; and(2) if an OPS firm is required by any rule in CASS to provide information to, or obtain consent from, a customer, that firm must ensure that the
CASS 1.4.2GRP
1(1) The custody chapter and the client money chapter apply in respect of any stock lending activity that is undertaken with or for a client3 by a firm. 133333(2) The collateral rules apply, where relevant, in respect of stock lending activity.13
CASS 1.4.4GRP
1(1) The custody chapter and the client money chapter apply in respect of oil market activity and other energy market activity that is undertaken by a firm.13333(2) The collateral rules apply, where relevant, in respect of energy market activity.13
CASS 1.4.5GRP
(1) Although CASS does not apply directly to a firm's appointed representatives, a firm will always be responsible for the acts and omissions of its appointed representatives in carrying on business for which the firm has accepted responsibility (section 39(3) of the Act). In determining whether a firm has complied with any provision of CASS, anything done or omitted by a firm's1appointed representative (when acting as such) will be treated as having been done or omitted by the
CASS 1.4.6AGRP
5Firms acting as trustee or depositary of an AIF are reminded of the obligations in FUND 3.11 (Depositaries) and Chapter IV (Depositary) of the AIFMD level 2 regulation which apply in addition to those in CASS.
CASS 1.4.7RRP
Subject to CASS 1.4.6 R, 5CASS applies to a depositary, when acting as such, with the following general modification: 'client' means 'trustee', 'trust', 'AIF', 'AIFM acting on behalf of the AIF', or 'collective investment scheme', as appropriate.555
CASS 1.3.1GRP
The rules in CASS 1.3 set out the maximum territorial scope of this sourcebook. Particular rules may have express territorial limitations.
CASS 1.3.2RRP
Except as provided for in CASS 1.2.3 R (2), CASS applies to every firm, in relation to regulated activities carried on by it from an establishment in the United Kingdom.
CASS 1.3.3RRP
CASS applies to every UK firm, other than an insurer, in relation to passported activities carried on by it from a branch in another EEA State.
CASS 1.3.4RRP
1CASS does not apply to an incoming ECA provider acting as such.
CASS 1A.3.1RRP
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) oversight of the firm’s operational compliance with CASS; and2(2) reporting to the firm’sgoverning body in respect of that oversight.22
CASS 1A.3.1ARRP
1A CASS medium firm and a CASS large firm must allocate to a director or senior manager the function of:(1) oversight of the operational effectiveness of that firm’s systems and controls that are designed to achieve compliance with CASS;(2) reporting to the firm’sgoverning body in respect of that oversight; and(3) completing and submitting a CMAR to the FCA in accordance with SUP 16.14.
CASS 1A.3.1BGRP
1CASS 1A.3.1A R describes the controlled function known as the CASS operational oversight function. The table of controlled functions in SUP 10.4.5 R together with SUP 10.7.9 R specify the CASS operational oversight function as a required function for a firm to which CASS 1A.3.1A R applies.
CASS 1A.3.1CRRP
2If, at the time a firm becomes a CASS medium firm or a CASS large firm in accordance with CASS 1A.2.12 R (1) or CASS 1A.2.12 R (2), the firm is not able to comply with CASS 1A.3.1A R because it has no director or senior manager who is an approved person in respect of the CASS operational oversight function, the firm must:(1) take the necessary steps to ensure that it complies with CASS 1A.3.1A R as soon as practicable, which must at least include submitting an application for
CASS 1.1.2GRP
The purpose of this chapter is to set out to whom, for what activities, and within what territorial limits the rules, evidential provisions and guidance in CASS apply.
SUP 10A.7.9RRP
In relation to a CASS medium firm and a CASS large firm, the CASS operational oversight function is the function of acting in the capacity of a person to whom is allocated the function set out in CASS 1A.3.1A R.
COBS 2.4.9RRP
Any information that a rule in COBS or CASS requires to be sent to a client may be sent to another person on the instruction of the client so long as the recipient is not connected to the firm.
COBS 2.4.10RRP
In the case of business that is not MiFID or equivalent third country business, if a rule in COBS or CASS requires information to be sent to a client, a firm need not send that information so long as it takes reasonable steps to establish that it has been or will be supplied by another person.
MIPRU 4.4.5RRP
In relation to a sole trader'sfirm or a firm which is a partnership, the sole trader or a partner in the firm may use personal assets to meet the general solvency requirement and the general capital resource requirement, to the extent necessary to make up any shortfall in meeting those requirements, unless:(1) those assets are needed to meet other liabilities arising from:(a) personal activities; or(b) another business activity not regulated by the appropriate regulator; or(2)
MIPRU 4.4.8RRP
  1. (1)

    This rule applies to a firm which:

    1. (a)

      carries on:

      1. (i)

        insurance mediation activity; or

      2. (ii)

        home finance mediation activity1(or both); and

        1
    1. (b)

      in relation to those activities, holds client money or other client assets;

but is not carrying on home financing1orhome finance administration1.

1111
  1. (2)

    In calculating its capital resources, the firm must exclude any amount by which the aggregate amount of its subordinated loans and its redeemable preference shares exceeds the amount calculated as follows:

    2. four times (a - b - c);

    where:

    a

    =

    items 1 to 5 in the Table of items which are eligible to contribute to a firm's capital resources (see MIPRU 4.4.2 R)

    b

    =

    the firm's redeemable preference shares; and

    c

    =

    the amount of its intangible assets (but not goodwill until 14 January 2008 - see transitional provision 1).
MIPRU 4.2.4RRP
In this chapter, "client assets" includes a document only if it has value, or is capable of having value, in itself (such as a bearer instrument)
MIPRU 4.2.21RRP
(1) If a firm carrying on home finance mediation activity1 and home financing1 or home finance administration1 does not hold client money or other client assets in relation to itshome finance mediation activity1, the capital requirement isthe amount applied to a firm, according to the activities carried on by the firm, by:111111(a) the capital resources requirement rule for a firm carrying on home financing1 or home financing1 and home finance administrator1 (and no other regulated
SYSC 10.2.4RRP
When any of the rules of COBS or CASS apply to a firm that acts with knowledge, the firm will not be taken to act with knowledge for the purposes of that rule if none of the relevant individuals involved on behalf of the firm acts with that knowledge as a result of arrangements established under SYSC 10.2.2 R.13
SUP 1A.4.4GRP
Some of these tools, for example the use of public statements to deliver messages to firms or consumers of financial services, do not involve the FCA in direct oversight of the business of firms. In contrast, other tools do involve a direct relationship with firms. The FCA also has powers to act on its own initiative to impose or vary individual requirements on a firm (see SUP 7) and to ban or impose requirements in relation to specific financial promotions. The FCA may also
SYSC 3.2.8RRP
(1) A firm which carries on designated investment business with or for retail clients or professional clients8 must allocate to a director or senior manager the function of:8(a) having responsibility for oversight of the firm's compliance; and(b) reporting to the governing body in respect of that responsibility.1(2) In 10 (1) "compliance" means compliance with the rules in:(a) COBS8(Conduct of Business); 8(b) COLL ( Collective Investment Schemes sourcebook)10; and1010(c) CASS
SUP 16.1.3RRP

Application of different sections of SUP 16 (excluding SUP 16.13, SUP 16.15, SUP 16.16 and SUP 16.17)6627

888999988888

(1) Section(s)

(2) Categories of firm to which section applies

(3) Applicable rules and guidance

SUP 16.1,SUP 16.2andSUP 16.3

All categories of firm except:

Entire sections

(a)

an ICVC;

(b)

an incoming EEA firm or incoming Treaty firm, which is not:

(i)

a firm of a type to which SUP 16.6 or 20SUP 16.1220 applies; or

(ii)

an insurer with permission to effect or carry outlife policies; or

(iii)3

a with to establish, operate or wind up a stakeholder pension scheme;14a firm with permission to establish, operate or wind up a personal pension scheme or a stakeholder pension scheme;14

(c)

a UCITS qualifier.

SUP 16.4 and SUP 16.52

All categories of firm except:

Entire sections

(-a)

a credit union;2

(a)

an ICVC;

(b)

an incoming EEA firm;

(c)

an incoming Treaty firm;

(d)

a non-directive friendly society;

(e)4

[deleted]4

(f)

a sole trader;

(g)

a service company;

(h)

a UCITS qualifier;8

8

(i)8

a firm with permission to carry on only retail investment activities;8

(j)8

a firm with permission to carry on only insurance mediation activity, home finance mediation activity,16 or both;8

16

(k)8

a firm falling within both (i) and (j)8

SUP 16.6

Bank

27

SUP 16.6.4 R to SUP 16.6.5 R

Depositary of an ICVC

SUP 16.6.6 R to SUP 16.6.9 G

OPS firm

SUP 16.6.6 R to SUP 16.6.8 R

Trustee of an AUT

SUP 16.6.6 R to SUP 16.6.9 G2628

Depositary of an ACS28

SUP 16.6.6 R to SUP 16.6.9 G28

SUP 16.8

Insurer with permission to effect or carry out life policies, unless it is a non-directive friendly society3

Entire section

3Firm with permission to establish, operate or wind up a personal pension scheme or a stakeholder pension scheme14

14

Entire section3

SUP 16.95

Firm with permission to advise on investments; arrange (bring about) deals in investments; make arrangements with a view to transactions in investments; or arrange safeguarding and administration of assets5

Entire section5

SUP 16.109

All categories of firm except:9

Entire section9

(a)9

an ICVC;9

(b)9

a UCITS qualifier; 21

(c)9

a credit union; and219

21(d)

a dormant account fund operator.

SUP 16.118

A firm, other than a managing agent, which is:8

Entire section8

(1)8

a home finance provider;16 or8

16

(2)8

an insurer; or8

(3)8

the operator of a regulated collective investment scheme or an investment trust savings scheme; or8

(4)8

a person who issues or manages the relevant assets of the issuer of a structured capital-at-risk product8.

17SUP 16.12

A firm undertaking the regulated activities as listed in SUP 16.12.4 R, unless exempted in SUP 16.12.1 G

Sections as relevant to regulated activities as listed in SUP 16.12.4 R23

232425SUP 16.14

A CASS large firm and a CASS medium firm

Entire section29

29SUP 16.18

A full-scope UK AIFM and a small authorised UK AIFM

SUP 16.8.3 R

27Note 2 = The application of SUP 16.13 is set out under SUP 16.13.1 G;66 the application of SUP 16.15 is set out under SUP 16.15.1 G; the application of SUP 16.16 is set out SUP 16.16.1 R and SUP 16.16.2 R and the application of SUP 16.17 is set out in SUP 16.17.3 R and SUP 16.17.4 R66.

66

29Note 3 = The application of SUP 16.18 for the types of AIFMs specified in SUP 16.1.1C G is set out in SUP 16.18.2 G.
SUP 3.1.2RRP

Applicable sections (see SUP 3.1.1 R)

This table and the provisions in SUP 3 should be read in conjunction with GEN 2.2.23 R to GEN 2.2.25 G. In particular, the PRA does not apply any of the provisions in SUP 3 in respect of FCA-authorised persons. SUP 3.10 and SUP 3.11 are applied by the FCA only.41

(1) Category of firm

(2) Sections applicable to the firm

(3) Sections applicable to its auditor

(1)

Authorised professional firm which is required by IPRU(INV) 2.1.2R to comply with chapters 3, 519 or 13 of IPRU(INV) and which has an auditor appointed under or as a result of a statutory provision other than in the Act9 (Notes 1 and 6)23

23192323

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

(2)

Authorised professional firm not within (1) to which the custody chapter or client money chapter applies22

172223

SUP 3.1 - SUP 3.7, SUP 3.11

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(3)

Authorised professional firm not within (1) or (2) which has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(4)

Bank, building society or dormant account fund operator21which in each case carries on designated investment business21(Notes 2A and 6)23

23

SUP 3.1-SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(5)

Bank, building society or a dormant account fund operator which in each case does not carry on designated investment business21 (Note 2A)

21

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(5A)

Credit union

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.824

(6)

Insurer, the Society of Lloyd's, underwriting agent or members' adviser, UK ISPV11 (Note 5)7

SUP 3.1 - SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(7)

Investment management firm, (other than an exempt CAD firm),16personal investment firm (other than a small personal investment firm or exempt CAD firm) 15,28securities and futures firm (other than an exempt CAD firm or an exempt BIPRU commodities firm20)15 or collective portfolio management firm that is an external AIFM28 which, in each case, has an auditor appointed under or as a result of a statutory provision other than in the Act9(Notes 3 and 623)17

239281723

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

9(7A)

Investment management firm (other than an exempt CAD firm)20, personal investment firm (other than a small personal investment firm or exempt CAD firm15),28securities and futures firm (other than an exempt CAD firm15 or an exempt BIPRU commodities firm20) or collective portfolio management firm that is an external AIFM28 not within (7) to which the custody chapter or client money chapter applies22

23281722

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.1025

25(7AA)

A firm that has exercised an opt in to CASS in accordance with CASS 1.4.9 R

SUP 3.1 to SUP 3.7, SUP 3.11

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10.

9(7B)

Collective portfolio management firm that is a 28UCITS firm13or an internally managed AIF28 (Note 6)23

13

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8,19SUP 3.10

19

13(7C)

UK MiFID investment firm, which has an auditor appointed under or as a result of a statutory provision other than in the Act (Notes 3B and 6)2320

2023

SUP 3.1 - 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.1014

17(7D)

Sole trader or partnership that is a UK20MiFID investment firm (other than an exempt CAD firm) (Notes 3C and 6)2320

2023

SUP 3.1 - SUP 3.7, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.10

(8)

Small personal investment firm or service company which, in either case, has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.7

SUP 3.1, SUP 3.2, SUP 3.8

(9)8

Home finance provider10 which has an auditor appointed under or as a result of a statutory provision other than in the Act9

10

SUP 3.1 - SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

(10)8

Insurance intermediary (other than an exempt insurance intermediary) to which the insurance client money chapter17 (except for CASS 5.2 (Holding money as agent)) applies (see Note 4)8

17

SUP 3.1 - SUP 3.78, SUP 3.1123

SUP 3.1, SUP 3.2, SUP 3.8, SUP 3.108

(11)8

Exempt insurance intermediary and insurance intermediary not subject to SUP 3.1.2 R(10) which has an auditor appointed under or as a result of a statutory provision other than in the Act

SUP 3.1, SUP 3.2, SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

(12)8

Home finance intermediary10 or home finance administrator10 which has an auditor appointed under or as a result of a statutory provision other than in the Act.

1010

SUP 3.1, SUP 3.2, SUP 3.78

SUP 3.1, SUP 3.2, SUP 3.88

Note 1 = This chapter applies to an authorised professional firm in row (1) (and its auditor) as if the firm were of the relevant type in the right-hand column of IPRU(INV) 2.1.4R.

Note 2 [deleted]23

171723

Note 2A = For this purpose, designated investment business does not include either or both:

(a) dealing which falls within the exclusion in article 15 of the Regulated Activities Order (Absence of holding out etc) (or agreeing to do so); and

(b) dealing in investments as principal (or agreeing to do so):

(i) by a firm whose permission to deal in investments as principal is subject to a limitation to the effect that the firm, in carrying on this regulated activity, is limited to entering into transactions in a manner which, if the firm was an unauthorised person, would come within article 16 of the Regulated Activities Order (Dealing in contractually based investments); and

(ii) in a manner which comes within that limitation;

having regard to article 4(4) of the Regulated Activities Order (Specified activities: general23).

18

Note 3 = This note applies in relation to an oil market participant to which IPRU(INV) 3 does not apply and in relation to an energy market participant to which IPRU(INV) 3 does not apply. In SUP 3:

(a) only SUP 3.1, SUP 3.2 and SUP 3.7 are applicable to such a firm; and

(b) only SUP 3.1, SUP 3.2 and SUP 3.8 are applicable to its auditor;

and, in each case, only if it has an auditor appointed under or as a result of a statutory provision other than in the Act.

17Note 3A [deleted]23

23

20Note 3B = UK MiFID investment firms include exempt CAD firms. An exempt CAD firm that has opted into MiFID can benefit from the audit exemption for small companies in the Companies Act legislation if it meets the relevant criteria in that legislation and fulfils the conditions of regulation 4C(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007. If a firm does so benefit then SUP 3 will not apply to it. For further details about exempt CAD firms, see PERG 13, Q58.

17Note 3C20 = A sole trader or a partnership that is a UK MiFID investment firm20 to which the custody chapter22 or client money chapter applies2220 must have its annual accounts audited.

20202222

Note 4 = The client money audit requirement in SUP 3.1.2 R(10) therefore applies to all insurance intermediaries except:8

• those which do not hold client money or other client assets in relation to insurance mediation activities; or 8

• those which only hold up to, but not exceeding, £30,000 of client money under a statutory trust arising under CASS 5.3.8

Insurance intermediaries which, in relation to insurance mediation activities, hold no more than that amount of client money only on a statutory trust are exempt insurance intermediaries.8

Note (5) = In row (6):7

(a)7

SUP 3.1 - SUP 3.7 applies to a managing agent in respect of its own business and in respect of the insurance business of each syndicate which it manages; and7

(b)7

SUP 3.1, SUP 3.2 and SUP 3.8 apply to the auditors of a managing agent and the auditors of the insurance business of each syndicate which the managing agent manages.1234567

23Note 6 = Where SUP 3.11 applies to a firm, and SUP 3.10 applies to the auditor of that firm, those sections apply whether or not that firm'spermission prevents it from holding client money or custody assets and whether or not it holds client money or custody assets.A collective portfolio management firm that is an internally managed AIF is required to appoint an auditor under FUND 3.3.6R (2) (Annual report of an AIF) because the AIFM is also an AIF.28
GEN 4.2.2GRP
There are other pre-contract information requirements outside this chapter, including:(1) for financial promotions, inthe financial promotion rules;55(2) for designated investment business, inCOBS 8 (Client agreements), COBS 5 (Distance Communications), COBS 6 (Information about the firm, its services and remuneration), COBS 13 and 14 (which relate to product information)5 and CASS (Client assets);5(3) for non-investment insurance contracts3, distance communication requirements
MIPRU 4.1.17GRP
There is a greater risk to consumers, and a greater adverse impact on market confidence, if a firm holding client money or other client assets fails. For this reason, the capital resources rules in this chapter clearly distinguish between firms holding client assets and those that do not.
SYSC 6.1.4ARRP
(1) 4A firm which is not a common platform firm or management company8 and which carries on designated investment business with or for retail clients or professional clients must allocate to a director or senior manager the function of:(a) having responsibility for oversight of the firm's compliance; and(b) reporting to the governing body in respect of that responsibility.(2) In SYSC 6.1.4A R (1) compliance means compliance with the rules in:(a) COBS (Conduct of Business sourcebook);(b)
CASS 6.1.2GRP
Firms are reminded that dividends (actual or payments in lieu), stock lending fees and other payments received for the benefit of a client, and which are due to the clients,2 should be held in accordance with the client money chapter where appropriate.2
SUP 3.10.9CGRP
(1) 5The FCA expects that the list of breaches will include every breach of a rule in CASS insofar as that rule is within the scope of the client assets report and is identified in the course of the auditor’s review of the period covered by the report, whether identified by the auditor or disclosed to it by the firm, or by any third party.(2) 5For the purpose of determining whether to qualify its opinion or express an adverse opinion, the FCA would expect an auditor to exercise