Related provisions for CASS 5.5.27

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CASS 5.5.4RRP
If a firm is liable to pay money to a client, it must as soon as possible, and no later than one business day after the money is due and payable:(1) pay it into a client bank account, in accordance with CASS 5.5.5 R; or(2) pay it to, or to the order of, the client.
CASS 5.5.5RRP
A firm must segregate client money by either:(1) paying it as soon as is practicable into a client bank account; or(2) paying it out in accordance with CASS 5.5.80 R.
CASS 5.5.6GRP
The FCA expects that in most circumstances it will be practicable for a firm to pay client money into a client bank account by not later than the next business day after receipt.
CASS 5.5.7GRP
Where an insurance transaction involves more than one firm acting in a chain such that for example money is transferred from a "producing" broker who has received client money from a consumer5 to an intermediate broker and thereafter to an insurance undertaking, each broker firm will owe obligations to its immediate client to segregate client money which it receives (in this example the producing broker in relation to the consumer5and the intermediate broker in relation to the
CASS 5.5.8RRP
A firm may segregate client money in a different currency from that of receipt. If it does so, the firm must ensure that the amount held is adjusted at intervals of not more than twenty five business days to an amount at least equal to the original currency amount (or the currency in which the firm has its liability to its clients, if different), translated at the previous day's closing spot exchange rate.
CASS 5.5.9RRP
A firm must not hold money other than client money in a client bank account unless it is:(1) a minimum sum required to open the account, or to keep it open; or(2) money temporarily in the account in accordance with CASS 5.5.16 R (Withdrawal of commission and mixed remittance); or(3) interest credited to the account which exceeds the amount due to clients as interest and has not yet been withdrawn by the firm.
CASS 5.5.10RRP
If it is prudent to do so to ensure that client money is protected (and provided that doing so would otherwise be in accordance with CASS 5.5.63 R (1)(b)(ii)),2 a firm may pay into, or maintain in, a client bank account money of its own, and that money will then become client money for the purposes of CASS 5 and the client money (insurance) distribution rules.
CASS 5.5.11RRP
A firm, when acting in accordance with CASS 5.3 (statutory trust), must ensure that the total amount of client money held for each client in any of the firm'sclient moneybankaccounts is positive and that no payment is made from any such account for the benefit of a client unless the client has provided the firm with cleared funds to enable the payment to be made.
CASS 5.5.11AGRP
2When a firm acts in accordance with CASS 5.3 (Statutory trust) it should not make a payment from the client bank account unless it is satisfied on reasonable grounds that the client has provided it with cleared funds. Accordingly, a firm should normally allow a reasonable period of time for cheques to clear. If a withdrawal is made and the client's cheque is subsequently dishonoured it will be the firm's responsibility to make good the shortfall in the account as quickly as possible
CASS 5.5.12RRP
If client money is received by the firm in the form of an automated transfer, the firm must take reasonable steps to ensure that:(1) the money is received directly into a client bank account; and(2) if money is received directly into the firm's own account, the money is transferred into a client bank account no later than the next business day after receipt.
CASS 5.5.13GRP
A firm can hold client money in either a general client bank account (CASS 5.5.38 R) or a designated client bank account (CASS 5.5.39 R). A firm holds all client money in general client bank accounts for its clients as part of a common pool of money so those particular clients do not have a claim against a specific sum in a specific account; they only have a claim to the client money in general. A firm holds client money in designated client bank accounts for those clients who requested
CASS 5.5.15GRP
A firm which takes advantage of CASS 5.5.14 R will need to consider whether its permission should include the permitted activity of managing investments. If the firm is granted a power to manage with discretion the funds over which it is appointed as trustee under the trust deed required by CASS 5.4 then it will be likely to need a permission to manage investments. It is unlikely to need such a permission, however, if it is merely granted a power to invest but the deed stipulates
CASS 5.5.16RRP
(1) A firm may draw down commission from the client bank account if:(a) it has received the premium from the client (or from a third party premium finance provider on the client's behalf);2 and(b) this is consistent with the firm'sterms of business which it maintains with the relevant client and 2the insurance undertaking to whom the premium will become2 payable;and the firm may draw down commission before payment of the premium to the insurance undertaking, provided that the conditions
CASS 5.5.17GRP
(1) As soon as commission becomes due to the firm (in accordance with CASS 5.5.16 R (1)) it must be treated as a remittance which must be withdrawn in accordance with CASS 5.5.16 R (2). 2The procedure required by CASS 5.5.16 R will also 2apply where moneyis 2due and payable 2to the firm in respect of fees due from clients (whether to the firm or other professionals).(2) Firms are reminded that money received in accordance with CASS 5.2 must not, except where a firm and an insurance
CASS 5.5.18RRP
(1) Subject to (4), a 2firm must in relation to each of its appointed representatives, field representatives and other agents comply with CASS 5.5.19 R to CASS 5.5.21 R (Immediate segregation) or with CASS 5.5.23 R (Periodic segregation and reconciliation).(2) A firm must in relation to each representative or other agent keep a record of whether it is complying with CASS 5.5.19 R to CASS 5.5.21 R or with CASS 5.5.23 R.(3) A firm is, but without affecting the application of CASS
CASS 5.5.23RRP
(1) A firm must, on a regular basis, and at reasonable intervals, ensure that it holds in its client bank account an amount which (in addition to any other amount which it is required by these rules to hold) is not less than the amount which it reasonably estimates to be the aggregate of the amounts held at any time by its appointed representatives, field representatives, and other agents.(2) A firm must, not later than ten business days following the expiry of each period in
CASS 5.5.24GRP
(1) CASS 5.5.23 R allows a firm with appointed representatives, field representatives and other agents to avoid the need for the representative to forward client money on a daily basis but instead requires a firm to segregate into its client money bank account amounts which it reasonably estimates to be sufficient to cover the amount of client money which the firm expects its representatives or agents to receive and hold over a given period. At the expiry of each such period, the
CASS 5.5.26RRP
A firm must take reasonable steps to ensure that it is notified promptly of any receipt of client money in the form of client entitlements.
CASS 5.5.28RRP
When a firm receives a client entitlement on behalf of a client, it must pay any part of it which is client money:(1) for client entitlements received in the United Kingdom, into a client bank account in accordance with CASS 5.5.5 R; or(2) for client entitlements received outside the United Kingdom, into any bank account operated by the firm, provided that such client money is:(a) paid to, or in accordance with, the instructions of the client concerned; or(b) paid into a client
CASS 5.5.29RRP
A firm must take reasonable steps to ensure that a client entitlement which is client money is allocated within a reasonable period of time after notification of receipt.
CASS 5.5.30RRP
(1) In relation to consumers5, a firm must, subject to (2), take reasonable steps to ensure that its terms of business or other client agreements4 adequately explain, and where necessary obtain a client's informed consent to, the treatment of interest and, if applicable, investment returns, derived from its holding of client money and any segregated designated investments.54(2) In respect of interest earned on client bank accounts, (1) does not apply if a firm has reasonable ground
CASS 5.5.33GRP
CASS 5.5.34 R sets out the requirements a firm must comply with when it transfers client money to another person without discharging its fiduciary duty owed to that client. Such circumstances arise when, for example, a firm passes client money to another broker for the purposes of the client's transaction being effected. A firm can only discharge itself from its fiduciary duty by acting in accordance with, and in the circumstances permitted by, CASS 5.5.80 R.
CASS 5.5.40GRP
(1) A firm may operate as many client accounts as it wishes.(2) A firm is not obliged to offer its clients the facility of a designated client bank account.(3) Where a firm holds money in a designated client bank account, the effect upon either:(a) the failure of a bank where any other client bank account is held; or(b) the failure of a third party to whom money has been transferred out of any other client bank account in accordance with CASS 5.5.34 R;(each of which is a secondary
CASS 5.5.41RRP
A firm may hold client money with a bank that is not an approved bank if all the following conditions are met:(1) the client money relates to one or more insurance transactions which are subject to the law or market practice of a jurisdiction outside the United Kingdom;(2) because of the applicable law or market practice of that overseas jurisdiction, it is not possible to hold the client money in a client bank account with an approved bank;(3) the firm holds the money with such
CASS 5.5.42GRP
A firm owes a duty of care to a client when it decides where to place client money. The review required by CASS 5.5.43 R is intended to ensure that the risks inherent in placing client money with a bank are minimised or appropriately diversified by requiring a firm to consider carefully the bank or banks with which it chooses to place client money. For example, a firm which is likely only to hold relatively modest amounts of client money will be likely to be able to satisfy this
CASS 5.5.46GRP
A firm will be expected to perform due diligence when opening a client bank account with a bank that is authorised in the United Kingdom8. Any continuing assessment of that bank may be restricted to verification that it remains authorised in the United Kingdom8.
CASS 5.5.47RRP
Subject to CASS 5.5.41 R, a firm that holds or intends to hold client money with a bank which is in the same group as the firm must:(1) undertake a continuous review in relation to that bank which is at least as rigorous as the review of any bank which is not in the same group, in order to ensure that the decision to use a group bank is appropriate for the client;(2) disclose in writing to its client at the outset of the client relationship (whether by way of a client agreement,4terms of
CASS 5.5.48RRP
If a client has notified a firm in writing that he does not wish his money to be held with a bank in the same group as the firm, the firm must either:(1) place that client money in a client bank account with another bank in accordance with CASS 5.5.38 R; or(2) return that client money to, or pay it to the order of, the client.
CASS 5.5.51RRP
In the case of a client bank account outside the United Kingdom, if the bank does not provide the acknowledgement referred to in CASS 5.5.49 R within 20 business days after the firm dispatched the notice, the firm must notify the client of this fact as set out in CASS 5.5.53 R.
CASS 5.5.53RRP
A firm must not hold, for a consumer5, client money in a client bank account outside the United Kingdom, unless the firm has previously disclosed to the consumer5 (whether in its terms of business, client agreement11 or otherwise in writing):5511(1) that his money may be deposited in a client bank account outside the United Kingdom but that the client may notify the firm that he does not wish his money to be held in a particular jurisdiction;(2) that in such circumstances, the
CASS 5.5.56RRP
If a client has notified a firm in writing before entering into a transaction that client money is not to be held in a particular jurisdiction, the firm must either:(1) hold the client money in a client bank account in a jurisdiction to which the client has not objected; or(2) return the client money to, or to the order of, the client.
CASS 5.5.58RRP
A firm must not undertake any transaction for a consumer5 that involves client money being passed to another broker or settlement agent located in a jurisdiction outside the United Kingdom, unless the firm has previously disclosed to the consumer5 (whether in its terms of business, client agreement 4or otherwise in writing):554(1) that his client money may be passed to a person outside the United Kingdom but the client may notify the firm that he does not wish his money to be
CASS 5.5.60RRP
If a client has notified a firm before entering into a transaction that he does not wish his money to be passed to another broker or settlement agent located in a particular jurisdiction, the firm must either:(1) hold the client money in a client bank account in the United Kingdom or a jurisdiction to which the money has not objected and pay its own money to the firm's own account with the broker, agent or counterparty; or(2) return the money to, or to the order of, the clien
CASS 5.5.62GRP
(1) In order that a firm may check that it has sufficient money segregated in its client bank account (and held by third parties) to meet its obligations to clients it is required periodically to calculate the amount which should be segregated (the client money requirement) and to compare this with the amount shown as its client money resource. This calculation is, in the first instance, based upon the firm's accounting records and is followed by a reconciliation with its banking
CASS 5.5.65RRP
The client money resource, for the purposes of CASS 5.5.63 R (1)(a),2 is:(1) the aggregate of the balances on the firm's client money bank accounts, as at the close of business on the previous business day and, if held in accordance with CASS 5.4, designated investments (valued on a prudent and consistent basis) together with client money held by a third party in accordance with CASS 5.5.34 R; and(2) (but only if the firm is comparing the client money resource with its client's
CASS 5.5.66RRP
A firm'sclient money (client balance) requirement is the sum of, for all clients, the individual client balances calculated in accordance with CASS 5.5.67 R but excluding any individual balances which are negative (that is, uncleared client funds).
CASS 5.5.67RRP
The individual client balance for each client must be calculated as follows:(1) the amount paid by a client to the firm (to include all premiums); plus(2) the amount due to the client (to include all claims and premium refunds); plus(3) the amount of any interest or investment returns due to the client;(4) less the amount paid to insurance undertakings for the benefit of the client (to include all premiums and commission due to itself) (i.e. commissions that are due but have not
CASS 5.5.68RRP
A firm's client money (accruals) requirement is the sum of the following:(1) all insurance creditors shown in the firm's business ledgers as amounts due to insurance undertakings, clients and other persons; plus(2) unearned commission 2being the amount of commission 2shown as accrued (but not shown as due 2and payable) as at the date of the calculation (a prudent estimate must be used if the firm is unable to produce an exact figure at the date of the calculation).
CASS 5.5.69RRP
A firm which calculates its client money requirement on the preceding basis must in addition and within a reasonable period be able to match its client money resource to its requirement by reference to individual clients (with such matching being achieved for the majority of its clients and transactions).
CASS 5.5.79GRP
The purpose of CASS 5.5.80 R to CASS 5.5.83 R is to set out those situations in which a firm will have fulfilled its contractual and fiduciary obligations in relation to any client money held for or on behalf of its client, or3 in relation to the firm's ability to require repayment of that money from a third party3.
CASS 5.5.80RRP
Money ceases to be client money if it is paid:(1) to the client, or a duly authorised representative of the client; or(2) to a third party on the instruction of or with the specific consent of the client, but not if it is transferred to a third party in the course of effecting a transaction, in accordance with CASS 5.5.34 R; or(3) into a bank account of the client (not being an account which is also in the name of the firm); or(4) to the firm itself, when it is due and payable
CASS 5.5.81GRP
(1) A firm which pays professional fees (for example to a loss adjuster or valuer) on behalf of a client may do so in accordance with CASS 5.5.80 R (2) where this is done on the instruction of or with the consent of the client.(2) When a firm wishes to transfer client money balances to a third party in the course of transferring its business to another firm, it should do so in compliance with CASS 5.5.80 R and a transferee firm will come under an obligation to treat any client
CASS 5.5.83RRP
For the purposes of CASS 5.1.5 R, if a firm makes a payment to, or on the instructions of, a client, from an account other than a client bank account, until that payment has cleared, no equivalent sum will become due and payable to the firm or may be withdrawn from a client bank account by way of reimbursement.
CASS 7.11.3RRP
(1) A firm must ensure that any TTCA5 is the subject of a written agreement made on a durable medium between the firm and the client.(2) Regardless of the form of the written agreement in (1) (which may have additional commercial purposes), it must cover the client's agreement to:(a) the terms for the arrangement relating to the transfer of the client's full ownership of money to the firm;(b) any terms under which the ownership of money is to transfer from the firm back to the
CASS 7.11.4ARRP
(1) 5A firm must properly consider and document the use of TTCAs in the context of the relationship between the client’s obligation to the firm and the money subjected to TTCAs by the firm.(2) A firm must be able to demonstrate that it has complied with the requirement under (1).(3) When considering, and documenting, the appropriateness of the use of TTCAs, a firm must take into account the following factors:(a) whether there is only a very weak connection between the client’s
CASS 7.11.6GRP
Where a firm has received full title or full ownership to money under a collateral arrangement, the fact that it has also granted a security interest to its client to secure its obligation to repay that money to the client would not result in the money being client money. This can be compared to a situation in which a firm takes a charge or other security interest over money held in a client bank account, where that money would still be client money as there would be no absolute
CASS 7.11.7GRP
Firms are reminded of the client'sbest interest rule, which requires a firm to act honestly, fairly and professionally in accordance with the best interests of its clients when structuring its business particularly in respect of the effect of that structure on firms' obligations under the client money rules.
CASS 7.11.9RRP
(1) If a client communicates to a firm that it wishes (whether pursuant to a contractual right or otherwise) to terminate a TTCA5, and the client's communication is not in writing, the firm must make a written record of the client's communication, which also records the date the communication was received.(2) A firm must keep a client's written communication, or a written record of the client's communication in (1), for five years starting from the date the communication was received
CASS 7.11.10GRP
CASS 7.11.9 R (3)(a) refers only to a firm's agreement to terminate an existing TTCA5. Such agreement by a firm does not necessarily need to amount to the termination of its entire agreement with the client.
CASS 7.11.11GRP
When a firm notifies a client under CASS 7.11.9 R (3)(a) of when the termination of a TTCA5 is to take effect, it should take into account:(1) any relevant terms relating to such a termination that have been agreed with the client; and(2) the period of time it reasonably requires to return the money to the client, or to update its records under CASS 7.15 (Records, accounts and reconciliations) and to segregate the money as client money under CASS 7.13 (Segregation of client m
CASS 7.11.14RRP
(1) Subject to (2) and CASS 7.11.16 R and with the agreement of the relevant client, money need not be treated as client money in respect of a delivery versus payment transaction through a commercial settlement system if:(a) in respect of a client's purchase the firm intends for the money from the client to be due to it within one business day following the firm's fulfilment of its delivery obligation to the client; or(b) in respect of a client's sale, the firm intends for the
CASS 7.11.18GRP
(1) In line with CASS 7.11.14 R, where a firm receives money from the client in fulfilment of the client's payment obligation in respect of a delivery versus payment transaction the firm is carrying out through a commercial settlement system in respect of a client's purchase, and the firm has not fulfilled its delivery obligation to the client by close of business on the third business day following the date of the client's fulfilment of its payment obligation to the firm, the
CASS 7.11.20RRP
(1) If a firm makes use of the exemption under CASS 7.11.14 R, it must obtain the client's written agreement to the firm's use of the exemption.(2) In respect of each client, the record created in (1) must be retained during the time that the firm makes use, or intends to make use, of the exemption under CASS 7.11.14 R in respect of that client's monies.
CASS 7.11.21RRP
(1) Subject to (2)(a)3, money need not be treated as client money:3(a) in respect of a delivery versus payment transaction for the purpose of settling a transaction in relation to units in a regulated collective investment scheme in either of the following circumstances:(i) the authorised fund manager receives the money from a client in relation to the authorised fund manager's obligation to issue units, in an AUT or ACS, or to arrange for the issue of units in an ICVC, in accordance
CASS 7.11.23GRP
Where proceeds of redemption paid to the client in accordance with CASS 7.11.21 R (1)(a)(ii) are paid by cheque, the cheque should be issued from the relevant client bank account.
CASS 7.11.24RRP
(1) If a firm makes use of the exemption under CASS 7.11.21 R, it must obtain the client's written agreement to the firm's use of the exemption.(2) In respect of each client, the record created in (1) must be retained for the duration of the time that the firm makes use of the exemption under CASS 7.11.21 R in respect of that client's money.
CASS 7.11.27GRP
Money held as client money becomes due and payable to the firm or for the firm's own account, for example, because the firm acted as principal in the contract or the firm, acting as agent, has itself paid for securities in advance of receiving the purchase money from its client. The circumstances in which it is due and payable will depend on the contractual arrangement between the firm and the client.
CASS 7.11.29GRP
When a client's obligation or liability, which is secured by that client's asset, crystallises, and the firm realises the asset in accordance with an agreement entered into between the client and the firm, the part of the proceeds of the asset to cover such liability that is due and payable to the firm is not client money. However, any proceeds of sale in excess of the amount owed by the client to the firm should be paid over to the client immediately or be held in accordance
CASS 7.11.30GRP
When a firm has entered into an arrangement under which commission is rebated to a client, those rebates need not be treated as client money until they become due and payable to the client in accordance with the terms of the contractual arrangements between the parties.
CASS 7.11.31GRP
When commission rebate becomes due and payable to the client, the firm should: (1) treat it as client money; or(2) pay it out in accordance with the rule regarding the discharge of a firm's fiduciary duty to the client (see CASS 7.11.34 R); unless the firm and the client have entered into an arrangement under which the client has agreed to transfer full ownership of this money to the firm as collateral against payment of future professional fees (see CASS 7.11 (Title transfer
CASS 7.11.33GRP
(1) The firm may, under the terms of its agreement with the client, pay some, none, or all interest earned to the relevant client.(2) Where interest is payable on client money by a firm to clients: (a) such sums are client money and so, if not paid to, or to the order of the clients, are required to be segregated in accordance with CASS 7.13 (Segregation of client money); (b) the interest should be paid to clients in accordance with the firm's agreement with each client; and(c)
CASS 7.11.40RRP
When 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 by the bank.
CASS 7.11.42RRP
Subject to CASS 7.11.44 R, money ceases to be client money for a firm if:(1) it is transferred by the firm to another person as part of a transfer of business to that person where the client money relates to the business being transferred;(2) it is transferred on terms which require the other person to return a client's transferred sums to the client as soon as practicable at the client's request;(3) a written agreement between the firm and the relevant client provides that:(a)
CASS 7.11.43GRP
In considering how and whether to introduce the written agreement referred to in CASS 7.11.42 R (3), firms should have regard to any relevant obligations to clients, including requirements under the Unfair Terms Regulations.
CASS 7.11.44RRP
(1) Client money belonging to those categories of clients set out in (2) and in respect of those amounts set out in (2) ceases to be client money of the firm if it is transferred by the firm to another person:(a) as part of a transfer of business to that other person where these sums relate to the business being transferred; and(b) on terms which require the other person to return a client's transferred sums as soon as practicable at the client's request.(2) (a) For retail clients
CASS 7.11.45GRP
For the avoidance of doubt, sums transferred under CASS 7.11.44 R do not, for the purposes of that rule, require the instruction or specific consent of each client at the time of the transfer or a written agreement as set out in CASS 7.11.42 R (3).
CASS 7.11.46RRP
Where a firm transfers client money belonging to its clients under either or both of CASS 7.11.42 R and CASS 7.11.44 R it must ensure that those clients are notified no later than seven days after the transfer taking place:(1) whether or not the sums will be held by the person to whom they have been transferred in accordance with the client money rules and if not how the sums being transferred will be held by that person;(2) the extent to which the sums transferred will be protected
CASS 7.11.48GRP
The purpose of CASS 7.11.50 R is to set out the requirements firms must comply with in order to cease to treat as client money any unclaimed balance which is allocated to an individual client.
CASS 7.11.50RRP
A firm may pay away to a registered charity of its choice a client money balance which is allocated to a client and if it does so the released balance will cease to be client money under CASS 7.11.34 R (10), provided:(1) this is permitted by law and consistent with the arrangements under which the client money is held; (2) the firm held the balance concerned for at least six years following the last movement on the client's account (disregarding any payment or receipt of interest,
CASS 7.11.51GRP
Where the client money balance held by a firm is, in aggregate, £100 or less for a client other than a retail client or, for a retail client, £25 or less, the firm may comply with CASS 7.11.57 R instead of CASS 7.11.50 R.
CASS 7.11.52ERP
(1) Taking reasonable steps in CASS 7.11.50 R (3) includes following this course of conduct:(a) determining, as far as reasonably possible, the correct contact details for the relevant client;(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 pay the sums concerned to charity if the firm does not receive instructions from the client within
CASS 7.11.53GRP
For the purpose of CASS 7.11.52 E (1)(a), a firm may use any available means to determine the correct contact details for the relevant client, including telephoning the client, searching internal records, media advertising, searching public records, mortality screening, using credit reference agencies or tracing agents.
CASS 7.11.54RRP
(1) Where a firm wishes to release a balance allocated to an individual client under CASS 7.11.50 R it must comply with either (a) or (b) and, in either case, (2):(a) the firm must unconditionally undertake to pay to the client concerned a sum equal to the balance paid away to charity in the event of the client seeking to claim the balance in future; or(b) the firm must ensure that an unconditional undertaking in the terms set out in (a) is made by a member of its group and there
CASS 7.11.55RRP
(1) If a firm pays away client money under CASS 7.11.50 R (4) it must make and retain, or where the firm already has such records, retain: (a) records of all balances released from client bank accounts under CASS 7.11.50 R (including details of the amounts and the identity of the client to whom the money was allocated); (b) all relevant documentation (including charity receipts); and(c) details of the communications the firm had or attempted to make with the client concerned pursuant
CASS 7.11.56GRP
The purpose of CASS 7.11.57 R is to allow a firm to pay away to charity client money balances of (i) £25 or less for retail clients or (ii) £100 or less for other clients when those balances remain unclaimed. If a firm follows this process, the money will cease to be client money (see CASS 7.11.34 R (10).
CASS 7.11.57RRP
A firm may pay away to a registered charity of its choice a client money balance which is allocated to a client and if it does so the released balance will cease to be client money under CASS 7.11.34 R (10):(1) the balance in question is (i) for a retail client, in aggregate, £25 or less, or (ii) for a professional client, in aggregate, £100 or less; (2) the firm held the balance concerned for at least six years following the last movement on the client's account (disregarding
CASS 6.1.1RRP
This chapter (the custody rules) applies to a firm:21(1) [deleted]22(a) [deleted]22(b) [deleted]22(1A) 2when it holds financial instruments belonging to a client in the course of its MiFID business;7(1B) 2when it is safeguarding and administering investments, in the course of business that is not MiFID business;7(1C) when it is acting as trustee or depositary of an AIF; 79(1D) when it is acting as trustee or depositary of a UK UCITS16; and97(1E) in respect of any arrangement for
CASS 6.1.1AGRP
2The regulated activity of safeguarding and administering investments covers both the safeguarding and administration of assets (without arranging) andarranging safeguarding and administration of assets,5 when those assets are either safe custody investments or custody assets. A safe custody investment is, in summary, a designated investment which a firm receives or holds on behalf of a client. Custody assets include designated investments, and any other assets that the firm holds
CASS 6.1.1CGRP
2In accordance with article 42 of the Regulated Activities Order, a firm ("I") will not be arranging safeguarding and administration of assets if it introduces a client to another firm whose permitted activities include the safeguarding and administration of investments, or to an exempt person acting as such, with a view to that other firm or exempt person:(1) providing a safe custody service in the United Kingdom; or(2) arranging for the provision of a safe custody service in
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
CASS 6.1.4RRP
The custody rules do not apply where a firm carries on business in its name but on behalf of the client where that is required by the very nature of the transaction and the client is in agreement.[Note: recital 5114 to MiFID]
CASS 6.1.5GRP
For example, this chapter does not apply where a firm borrows safe custody assets2 from a client as principal under a stock lending agreement.2
CASS 6.1.6BRRP
(1) 9A firm must ensure that any TTCA14 is the subject of a written agreement made on a durable medium between the firm and the client.(2) Regardless of the form of the agreement in (1) (which may have additional commercial purposes), it must cover the client's agreement to: (a) the terms for the arrangement relating to the transfer of the client's full ownership of the safe custody asset to the firm;(b) any terms under which the ownership of the safe custody asset is to transfer
CASS 6.1.6DRRP
(1) 14A firm must properly consider and document the use of TTCAs in the context of: (a) the relationship between the client’s obligation to the firm; and (b) the safe custody assets subjected to TTCAs by the firm.(2) A firm must be able to demonstrate that it has complied with the requirement under (1).(3) When considering, and documenting, the appropriateness of the use of TTCAs, a firm must take into account the following factors:(a) whether there is only a very weak connection
CASS 6.1.8CGRP
9When a firm notifies a client under CASS 6.1.8AR (3)(a) of when the termination of a TTCA14 is to take effect, it should take into account:(1) any relevant terms relating to such a termination that have been agreed with the client; and(2) the period of time it reasonably requires to return the safe custody asset to the client or to update the registration under (Holding of client assets) CASS 6.2and update its records under CASS 6.6 (Records, accounts and reconciliations).
CASS 6.1.8EGRP
(1) 9Following the termination of a TTCA14 , where a firm does not immediately return the safe custody assets to the client the firm should consider whether the custody rules apply in respect of the safe custody assets pursuant to CASS 6.1.1R14.(2) Where the custody rules apply to a firm for safe custody assets in these circumstances then the firm is required to comply with those rules and should, for example, update the registration under CASS 6.2(Holding of client assets), update
CASS 6.1.9GRP
Firms are reminded that, in certain cases, the collateral rules apply where a firm receives collateral from a client in order to secure the obligations of the client.
CASS 6.1.10GRP
The fact that a client is an affiliated company in respect of MiFID business2 does not affect the operation of the custody rules in relation to that client.
CASS 6.1.10BRRP
9In respect of a firm's business falling under CASS 6.1.1R (1B), the custody rules do not apply to the firm when it is safeguarding and administering investments on behalf of an affiliated company, unless:(1) the firm has been notified that the designated investment belongs to a client of the affiliated company; or(2) the affiliated company is a client dealt with at arm's length.
CASS 6.1.12RRP
(1) Subject to (2) and CASS 6.1.12B R and with the written agreement of the relevant client, a9firm need not treat this chapter as applying in respect of a delivery versus payment transaction through a commercial settlement system if:9929(a) in respect of a client's purchase, the firm intends for the asset in question to be due to the client within one business day following the client's fulfilment of its payment obligation to the firm;9 or9(b) in respect of a client's sale, the
CASS 6.1.12DGRP
(1) 9In line with CASS 6.1.12 R, where a firm receives a safe custody asset from a client in respect of a delivery versus payment transaction the firm is carrying out through a commercial settlement system in respect of a client's sale, and the firm has not fulfilled its payment obligation to the client by close of business on the third business day following the date of the client's fulfilment of its delivery obligation to the firm, the firm should consider whether the custody
CASS 6.1.12ERRP
(1) 9If a firm makes use of the exemption under CASS 6.1.12 R, it must obtain the client's written agreement to the firm's use of this exemption. (2) In respect of each client, the written agreement in (1) must be retained during the time that the firm makes use, or intends to make use, of the exemption under CASS 6.1.12 R in respect of that client'ssafe custody assets.
CASS 6.1.15GRP
The custody rules do not apply if a firm temporarily handles a safe custody asset2 belonging to a client. A firm should temporarily handle a safe custody asset2 for no longer than is reasonably necessary. In most transactions this would be no longer than one business day, but it may be longer or shorter depending upon the transaction in question. For example, when a firm executes an order to sell shares which have not been registered on a de-materialised exchange, handling documents
CASS 6.1.16GRP
When a firm temporarily handles a safe custody asset,2 in order to comply with its obligation to act in accordance with Principle 10 (Clients' assets), the following are guides to good practice:2(1) a firm should keep the safe custody asset2 secure, record it as belonging to that client, and forward it to the client or in accordance with the client's instructions as soon as practicable after receiving it; and2(2) a firm should make and retain a record of the fact that the firm
CASS 6.1.16ARRP
2The exemptions in CASS 6.1.16B R to CASS 6.1.16D G do not apply to a MiFID investment firm which holds financial instruments belonging to a client in the course of MiFID business.
CASS 6.1.16BAGRP
10(1) The custody rules do not apply to a firm that is managing an AIF or managing a UK UCITS16 in relation to excluded custody activities, except where the firm is a small AIFM.10(2) The custody rules can apply to a firm that is managing an AIF or managing a UK UCITS16 in relation to activities that are not excluded custody activities. For example, where the firm:10(a) holds financial instruments belonging to a client in the course of its MiFID business (see CASS 6.1.1R (1A));
CASS 6.1.16CRRP
2The custody rules do not apply to a personal investment firm when it temporarily holds a designated investment, other than in bearer form, belonging to a client, if the firm:(1) keeps it secure, records it as belonging to that client, and forwards it to the client or in accordance with the client's instructions, as soon as practicable after receiving it; (2) retains the designated investment for no longer than the firm has taken reasonable steps to determine is necessary to check
CASS 6.1.16ERRP
2The specialist regime in CASS 6.1.16F R to CASS 6.1.16I G does not apply to a MiFID investment firm which holds financial instruments belonging to a client in the course of MiFID business.
CASS 6.1.23GRP
The rules in this chapter are designed primarily to restrict the commingling of client and the firm's assets and minimise the risk of the client'ssafe custody assets2 being used by the firm without the client's agreement or contrary to the client's wishes, or being treated as the firm's assets in the event of its insolvency.2
CASS 6.1.24GRP
The custody rules also, where relevant,2implemented15 the provisions of MiFID which regulated15 the obligations of a firm when it held15financial instruments belonging to a client in the course of its MiFID business.2
CASS 5.6.7RRP
If a primary pooling event occurs:(1) client money held in each client money account of the firm is treated as pooled;(2) the firm must distribute that client money in accordance with CASS 5.3.2 R or, as appropriate, CASS 5.4.7 R, so that each client receives a sum which is rateable to the client money entitlement calculated in accordance with CASS 5.5.66 R; and(3) the firm must, as trustee, call in and make demand in respect of any debt due to the firm as trustee, and must liquidate
CASS 5.6.8GRP
A client's main claim is for the return of client money held in a client bank account. A client may claim for any shortfall against money held in a firm's own account. For that claim, the client will be an unsecured creditor of the firm.
CASS 5.6.9RRP
Client money received by the firm (including in its capacity as trustee under CASS 5.4 (Non-statutory trust)) after a primary pooling event must not be pooled with client money held in any client money account operated by the firm at the time of the primary pooling event. It must be placed in a client bank account that has been opened after that event and must be handled in accordance with the client money rules, and returned to the relevant client without delay, except to the
CASS 5.6.15RRP
CASS 5.6.20 R to CASS 5.6.31 R do not apply if, on the failure of the third party, the firm repays to its clients or pays into a client bank account, at an unaffected bank, an amount equal to the amount of client money which would have been held if a shortfall had not occurred at that third party.
CASS 5.6.16GRP
When client money is transferred to a third party, a firm continues to owe a fiduciary duty to the client. However, consistent with a fiduciary's responsibility (whether as agent or trustee) for third parties under general law, a firm will not be held responsible for a shortfall in client money caused by a third party failure if it has complied with those duties.
CASS 5.6.19GRP
The client money (insurance) distribution rules seek to ensure that clients who have previously specified that they are not willing to accept the risk of the bank that has fails, and who therefore requested that their client money be placed in a designated client bank account as a different bank, should not suffer the loss of the bank that has failed.
CASS 5.6.22RRP
Money held in each general client bank account of the firm must be treated as pooled and:(1) any shortfall in client money held, or which should have been held, in general client bank accounts, that has arisen as a result of the failure of the bank, must be borne by all the clients whose client money is held in a general client bank account of the firm, rateably in accordance with their entitlements;(2) a new client money entitlement must be calculated for each client by the firm,
CASS 5.6.24RRP
For each client with a designated client bank account held at the failed bank:(1) any shortfall in client money held, or which should have been held, in designated client bank accounts that has arisen as a result of the failure, must be borne by all the clients whose client money is held in a designated client bank account of the firm at the failed bank, rateably in accordance with their entitlements;(2) a new client money entitlement must be calculated for each of the relevant
CASS 5.6.25RRP
A client whose money was held, or which should have been held, in a designated client bank account with a bank that has failed is not entitled to claim in respect of that money against any other client bank account or client transaction account of the firm.
CASS 5.6.26RRP
Client money received by the firm after the failure of a bank, that would otherwise have been paid into a client bank account at that bank:(1) must not be transferred to the failed bank unless specifically instructed by the client in order to settle an obligation of that client to the failed bank; and(2) must be, subject to (1), placed in a separate client bank account that has been opened after the secondary pooling event and either:(a) on the written instruction of the client, transferred
CASS 5.6.30RRP
Money held in each general client bank account of the firm must be treated as pooled and:(1) any shortfall in client money held, or which should have been held, in general client bank accounts, that has arisen as a result of the failure, must be borne by all the clients whose client money is held in a general client bank account of the firm, rateably in accordance with their entitlements;(2) a new client money entitlement must be calculated for each client by the firm, to reflect
CASS 5.6.31RRP
Client money received by the firm after the failure of another broker or settlement agent, to whom the firm has transferred client money that would otherwise have been paid into a client bank account at that broker or settlement agent:(1) must not be transferred to the failed thirty party unless specifically instructed by the client in order to settle an obligation of that client to the failed broker or settlement agent; and(2) must be, subject to (1), placed in a separate client bank
CASS 7.16.9GRP
(1) A firm should ensure that the amount it reflects in its internal client money reconciliation as its client money resource is equal to the aggregate balance on its client bank accounts. For example, if:(a) a firm holds client money received as cash, cheques or payment orders but not yet deposited in a client bank account (in accordance with CASS 7.13.32 R); and(b) that firm records all receipts from clients, whether or not yet deposited with a bank, in its cashbook (see CASS
CASS 7.16.11RRP
The net negative add-back method may only be used, under this section, by a CASS 7 asset management firm or a CASS 7 loan-based crowdfunding firm and only if such firms do not undertake any margined transactions for, or on behalf of, their clients.
CASS 7.16.14GRP
(1) The individual client balance method (CASS 7.16.16 R) may be applied by any firm except a CASS 7 loan-based crowdfunding firm. This method requires a firm to calculate the total amount of client money it should be segregating in client bank accounts by reference to how much the firm should be holding in total (ie, across all its client bank accounts and businesses) for each of its individual clients for:(a) non-margined transactions (CASS 7.16.16 R (1) and CASS 7.16.21 R);
CASS 7.16.15GRP
The net negative add-back method (CASS 7.16.17 R) is available to CASS 7 asset management firms and CASS 7 loan-based crowdfunding firms, many of whom may operate internal ledger systems on a bank account by bank account, not client-by-client, basis. This method allows a firm to calculate the total amount of client money it is required to have segregated in client bank accounts by reference to: (1) the balances in each client bank account (see CASS 7.16.17 R (1) and CASS 7.16.18
CASS 7.16.16RRP
Subject to CASS 7.16.25 R and CASS 7.16.37 R, under this method the client money requirement must be calculated by taking the sum of, for all clients and across all products and accounts: (1) the individual client balances calculated under CASS 7.16.21 R, excluding:(a) individual client balances which are negative (ie, debtors); and(b) clients' equity balances;(2) the total margined transaction requirement (calculated under CASS 7.16.32 R); and(3) any amounts that have been segregated
CASS 7.16.17RRP
Subject to CASS 7.16.25 R, under this method the client money requirement must be calculated by taking the sum of, for each client bank account: (1) the amount which the firm's internal records show as held on that account; and(2) an amount that offsets each negative net amount which the firm's internal records show attributed to that account for an individual client.
CASS 7.16.22ERP
  1. (1)

    A firm may calculate either:

    1. (a)

      one individual client balance for each client,1 based on the total of the firm's holdings for that1client; or

    2. (b)

      a number of individual client balances for each client, equal to the number of products or business lines the firm operates for that client and each balance based on the total of the firm's holdings for that client in respect of the particular product or business line.1

  2. (2)

    Each individual client balance for a client should be calculated in accordance with this table:

    Individual client balance calculation

    Free money (sums held for a client free of sale or purchase (eg, see (3)(a)) and

    A

    sale proceeds due to the client:

    (a)

    for principal deals when the client has delivered the designated investments; and

    B

    (b)

    for agency deals, when:

    (i)

    the sale proceeds have been received by the firm and the client has delivered the designated investments; or

    C1

    (ii)

    the firm holds the designated investments for the client; and

    C2

    the cost of purchases:

    (c)

    for principal deals, paid for by the client when the firm has not delivered the designated investments to the client; and

    D

    (d)

    for agency deals, paid for by the client when:

    (i)

    the firm has not remitted the money to, or to the order of, the counterparty; or

    E1

    (ii)

    the designated investments have been received by the firm but have not been delivered to the client;

    E2

    Less

    money owed by the client for unpaid purchases by, or for, the client if delivery of those designated investments has been made to the client; and

    F

    proceeds remitted to the client for sales transactions by, or for, the client if the client has not delivered the designated investments.

    G

    Individual client balance 'X' = (A+B+C1+C2+D+E1+E2)-F-G

    X

  3. (3)

    When calculating an individual client balance for each client, a firm should also:

    1. (a)

      ensure it includes:

      1. (i)

        client money consisting of dividends received and interest earned and allocated (see CASS 7.11.32 R);

      2. (ii)

        client money consisting of dividends (actual or payments in lieu), stock lending fees and other payments received and allocated (see CASS 6.1.2 G);

      3. (iii)

        money the firm appropriates and segregates as client money to cover an unresolved shortfall in safe custody assets it identifies in its internal records which is attributable to an individual client (see CASS 6.6.54R (2)); and

      4. (iv)

        money the firm segregates as client money instead of an individual client's safe custody asset until such time as the relevant delivery versus payment transaction settles under CASS 6.1.12R (2); and

    2. (b)

      deduct any amounts due and payable by the client to the firm (see CASS 7.11.25 R).

  4. (4)

    Compliance with (1), (2) and (3)1 may be relied on as tending to establish compliance with CASS 7.16.21 R.

CASS 7.16.28RRP
Subject to CASS 7.16.30 R, a client's equity balance is the amount which the firm would be liable to pay to the client (or the client to the firm) under the client money rules for margined transactions if each of the open positions were liquidated at the closing or settlement prices published by the relevant exchange or other appropriate pricing source and the account with the firm were closed. This notional balance should include any unrealised losses or profits associated with
CASS 7.16.29RRP
Subject to CASS 7.16.30 R, a firm's equity balance is the amount which the firm would be liable to pay to the exchange, clearing house, intermediate broker or OTC counterparty (or vice-versa) for the firm's margined transactions if each of the open positions of those of the firm's clients that are entitled to protection under the client money rules were liquidated at the closing or settlement prices published by the relevant exchange or other appropriate pricing source and the
CASS 7.16.31GRP
The margined transaction requirement should represent the total amount of client money a firm is required under the client money rules to segregate in client bank accounts for margined transactions. The calculation in CASS 7.16.33 R is designed to ensure that an amount of client money is held in client bank accounts which equals at least the difference between the equity the firm holds at exchanges, clearing houses, intermediate brokers and OTC counterparties for margined transactions
CASS 7.16.33RRP
(1) To meet the total margin transaction requirement3, a firm may appropriate and use its own approved collateral, provided it meets the requirements in (2). (2) The firm must hold the approved collateral in a way which ensures that, in accordance with CASS 7A.2.3A R, the approved collateral will be liquidated on the occurrence of a primary pooling event and the proceeds paid into a client bank account, and in so doing:(a) ensure the approved collateral is clearly identifiable
CASS 7.16.37RRP
Where appropriate, a firm may:(1) when, in respect of a client, there is a positive individual client balance and a negative client equity balance, offset the credit against the debit and, therefore, have a reduced individual client balance in CASS 7.16.21 R for that client; and(2) when, in respect of a client, there is a negative individual client balance and a positive client equity balance, offset the credit against the debit and, therefore, have a reduced client equity balance
CASS 7.16.38GRP
The effect of CASS 7.16.37 R is to allow a firm to offset, on a client-by-client basis, a negative amount with a positive amount arising out of the calculations in CASS 7.16.21 R and CASS 7.16.28 R and, therefore, reduce its overall client money requirement.
CASS 7.19.1GRP
(1) 1Under CASS 7.17.2R(2)2, a firm acts as trustee for all client money received or held by it for the benefit of the clients for whom that client money is held, according to their respective interests in it.(2) A firm that is also a clearing member of an authorised central counterparty may wish to segregate client money specifically for the benefit of a group of clients who have chosen to clear positions through a net margined omnibus client account maintained by the firm with
CASS 7.19.2RRP
Where a firm creates a sub-pool for a particular net margined omnibus client account, it must not clear positions through that omnibus client account for clients who are not beneficiaries of that sub-pool.
CASS 7.19.6RRP
(1) The records maintained for a sub-pool under CASS 7.19.4 R must identify all the client beneficiaries of that sub-pool.(2) The beneficiaries of each sub-pool are those clients:(a) from whom the firm has received a signed sub-pool disclosure document in accordance with CASS 7.19.11 R;(b) for whom the firm maintains, previously maintained or is in the process of establishing a margined transaction(s) in the relevant net margined omnibus client account at the authorised central
CASS 7.19.9RRP
(1) A firm wishing to establish a sub-pool must prepare a sub-pool disclosure document for each sub-pool.(2) The sub-pool disclosure document for each sub-pool must:(a) identify the sub-pool by name, as stated in its records under CASS 7.19.7 R, the net margined omnibus client account and the authorised central counterparty to which the sub-pool disclosure document relates;(b) contain a statement that the client consents to the firm receiving and holding the client'sclient money
CASS 7.19.11RRP
(1) Before receiving or holding client money for a client for a sub-pool, a firm must:(a) provide to the client a copy of the sub-pool disclosure document applicable to that sub-pool; and(b) obtain a signed copy of that sub-pool disclosure document from the client.(2) A firm must provide the beneficiary of a sub-pool with a copy of its signed sub-pool disclosure document applicable to that sub-pool upon the beneficiary's request.
CASS 7.19.13RRP
(1) A firm must not hold client money for a sub-pool in a client bank account or a client transaction account used for holding client money for any other sub-pool or the general pool.(2) A firm that establishes a sub-pool must ensure that the name of each client bank account and each client transaction account (other than the net margined omnibus client account) maintained for that sub-pool includes a unique identifying reference or descriptor that enables the account to be identified
CASS 7.19.19GRP
A firm should keep in mind its obligations under CASS 7.19.11 R (1)(b) (before receiving or holding client money for a client in a sub-pool, a firm must obtain a signed copy of the sub-pool disclosure document from the client) when making a material change to a sub-pool. A firm is also reminded of the conditions under CASS 7.19.13 R (5)(b) (when a client of the firm who is a beneficiary of a sub-pool ceases to be a beneficiary of that sub-pool) if a material change proposed to
CASS 7.19.25RRP
The records maintained under this section, including the sub-pool disclosure documents, are a record of the firm that must be kept in a durable medium for at least five years following the date on which client money was last held by the firm for a sub-pool to which those records or the sub-pool disclosure document applied.
SYSC 10.1.3RRP
A firm must take all appropriate9 steps to identify and to prevent or manage9 conflicts of interest between:3(1) the firm, including its managers, employees and appointed representatives (or where applicable, 2tied agents)2, or any person directly or indirectly linked to them by control, and a client of the firm; or2(2) one client of the firm and another client;that arise or may arise in the course of the firm providing any service referred to in SYSC 10.1.1R including those
SYSC 10.1.4RRP
For the purposes of identifying the types of conflict of interest that arise, or may arise, in the course of providing a service and whose existence may 9damage the interests of a client, 9a management company5 must take into account, as a minimum, whether the firm or a relevant person, or a person directly or indirectly linked by control to the firm:(1) is likely to make a financial gain, or avoid a financial loss, at the expense of the client;(2) has an interest in the outcome
SYSC 10.1.5GRP
The circumstances which should be treated as giving rise to a conflict of interest cover cases where there is a conflict between the interests of the firm or certain persons connected to the firm or the firm'sgroup and the duty the firm owes to a client; or between the differing interests of two or more of its clients, to whom the firm owes in each case a duty. It is not enough that the firm may gain a benefit if there is not also a possible disadvantage to a client, or that one
SYSC 10.1.6RRP
A 9management company5and an insurance intermediary12 must keep and regularly update a record of the kinds of service or activity carried out by or on behalf of that5firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing service or activity, may arise.[Note:9 article 20(1) of the UCITS implementing Directive]55
SYSC 10.1.7RRP
A firm must maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest as defined in SYSC 10.1.3 R from adversely affecting9 the interests of its clients.[Note: article 169(3) of MiFID and article 27 of the IDD12]3
SYSC 10.1.8RRP
(1) If arrangements made by a firm under SYSC 10.1.7 R9 are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of a client will be prevented, the firm must clearly disclose the following9 to the client before undertaking business for the client:93(a) the general nature or sources of conflicts of interest, or both; and9(b) the steps taken to mitigate those risks.9(2) The disclosure must:(a) be made in a durable medium; 9(b) clearly state
SYSC 10.1.9ARRP
9A firm must treat disclosure of conflicts pursuant to SYSC 10.1.8R as a measure of last resort to be used only where the effective organisational and administrative arrangements established by the firm to prevent or manage its conflicts of interest in accordance with SYSC 10.1.7R are not sufficient to ensure, with reasonable confidence, that risks of damage to the interests of the client will be prevented.
SYSC 10.1.11RRP
(1) The conflicts of interest policy must include the following content:(a) it must identify in accordance with SYSC 10.1.3 R, SYSC 10.1.4 R, SYSC 10.1.4BR and SYSC 10.1.4CR (as applicable),12 by reference to the specific services and activities carried out by or on behalf of the management company or insurance intermediary12 the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more clients;
SYSC 10.1.16RRP
3The rules relating to:(1) types of conflict (see SYSC 10.1.4 R);(2) records of conflicts (see SYSC 10.1.6 R); and(3) conflicts of interest policies (see SYSC 10.1.10 R and SYSC 10.1.11 R);also apply to a firm which is not a common platform firm when it produces, or arranges for the production of, investment research that is intended or likely to be subsequently disseminated to clients of the firm or to the public10, and when it produces or disseminates non-independent research,10
SYSC 10.1.17RRP
5A UK UCITS management company13, when identifying the types of conflict of interests for the purposes of SYSC 10.1.4 R, must take into account:(1) the interests of the firm, including those deriving from its belonging to a group or from the performance of services and activities, the interests of the clients and the duty of the firm towards the UCITS scheme13it manages; and(2) where it manages two or more UCITS schemes13, the interests of all of them.[Note: article 17(2) of the
SYSC 10.1.18GRP
5For a UK UCITS management company13, references to client in SYSC 10.1.4 R and in the other rules in this section should be construed as referring to any UCITS scheme13managed by that firm or which it intends to manage, and with or for the benefit of which the relevant activity is to be carried on.
SYSC 10.1.19RRP
5A UK UCITS management company13 must be structured and organised in such a way as to minimise the risk of a UCITS scheme's13 or client's interests being prejudiced by conflicts of interest between the UK UCITS management company13 and its clients, between two of its clients, between one of its clients and a UCITS scheme13, or between two such schemes.[Note: articles 12(1)(b) and 14(1)(d) of the UCITS Directive]
SYSC 10.1.22RRP
6A collective portfolio management investment firm which manages investments other than for an AIF or UCITS for which it has been appointed as manager, must obtain approval from its client before it invests all or part of the client's portfolio in units or shares of an AIF or UCITS it manages.[Note: article 12(2)(a) of the UCITS Directive and article 12(2)(a) of AIFMD]
SYSC 10.1.23RRP
6An AIFM must take all reasonable steps to identify conflicts of interest that arise, in the course of managing AIFs, between:(1) the AIFM, including its managers, employees or any person directly or indirectly linked to the AIFM by control, and an AIF managed by the AIFM or the investors in that AIF; or(2) an AIF or the investors in that AIF, and another AIF or the investors in that AIF; or(3) an AIF or the investors in that AIF, and another client of the AIFM; or(4) an AIF or
CASS 6.2.1RRP
1A firm must, when holding safe custody assets2 belonging to clients, make adequate arrangements so as to safeguard clients' ownership rights, especially in the event of the firm's insolvency, and to prevent the use of safe custody assets2 belonging to a client on the firm's own account except with the client's express consent.[Note: article 16(8)10 of MiFID]22
CASS 6.2.3RRP
Subject to CASS 6.2.3A-1R, a9firm must effect appropriate registration or recording of legal title to a safe custody asset2 belonging to a client8 in the name of:62(1) the client, unless the client is an authorised person acting on behalf of its client, in which case it may be registered in the name of the client of that authorised person;6(2) a nominee company which is controlled by:(a) the firm;(b) an affiliated company;(c) a recognised investment exchange; or5(d) a third party
CASS 6.2.4RRP
A firm must accept the same level of responsibility to its client for any nominee company controlled by the firm, or any nominee company controlled by an affiliated company of the firm,6 with respect of any requirements of the custody rules.
CASS 6.2.5RRP
A firm may only6 register or record legal title to its own applicable asset6 in the same name as that in which legal title to a client's6safe custody asset2 is registered or recorded if the firm'sapplicable asset is separately identified from the client'ssafe custody asset in the firm's records, and either or both of the conditions in (1) and (2) are met.6262(1) The firm's holding of its own applicable asset arises incidentally to:66(a) designated investment business it carries
CASS 6.2.6GRP
6(1) Consistent with a firm's requirements to protect clients'safe custody assets and have adequate organisation arrangements in place (CASS 6.2.1 R and CASS 6.2.2 R), before a firm registers or records legal title to its own applicable asset in the same name as that in which legal title to a client'ssafe custody asset is registered or recorded under CASS 6.2.5 R, it should consider whether there are any means to avoid doing so.(2) Examples of where the conditions under CASS 6.2.5R
CASS 6.2.8GRP
6The purpose of CASS 6.2.10 R is to set out the requirements a firm must comply with if it chooses to divest itself of a client's unclaimed safe custody assets.
CASS 6.2.10RRP
6A firm may either (i) liquidate an unclaimed safe custody asset it holds for a client, at market value, and pay away the proceeds or (ii) pay away an unclaimed safe custody asset it holds for a client, in either case, to a registered charity of its choice provided:(1) this is permitted by law and consistent with the arrangements under which that safe custody asset is held; (2) it has held that safe custody asset for at least 12 years;(3) in the 12 years preceding the divestment
CASS 6.2.11ERP
(1) 6Taking reasonable steps in CASS 6.2.10R (4) includes following this course of conduct:(a) determining, as far as reasonably possible, the correct contact details for the relevant client;(b) writing to the client at the last known address either by post or by electronic mail to inform it: (i) of the name of the firm with which the client first deposited the safe custody asset in question; (ii) of the firm's intention to pay the safe custody asset to charity under CASS 6.2.10
CASS 6.2.12GRP
6For the purpose of CASS 6.2.11E (1)(a), a firm may use any available means to determine the correct contact details for the relevant client, including telephoning the client, searching internal records, media advertising, searching public records, mortality screening, using credit reference agencies or tracing agents.
CASS 6.2.14RRP
6Where a firm divests itself of a client'ssafe custody asset under CASS 6.2.10 R, it must comply with either (1)(a) or (1)(b) and, in either case, (2).(1) (a) The firm must unconditionally undertake to pay to the client concerned a sum equal to the value of the safe custody asset at the time it was liquidated or paid away in the event of the client seeking to claim the safe custody asset in future.(b) The firm must ensure that an unconditional undertaking in the terms set out
CASS 6.2.15RRP
(1) 6If a firm pays away a client's unclaimed safe custody assets to charity or liquidates a client's unclaimed safe custody assets and pays the proceeds to charity under CASS 6.2.10 R it must make and retain, or where the firm already has such records, retain:(a) records of all safe custody assets divested under CASS 6.2.10 R (including details of the value of each asset at that time and the identity of the client to whom the asset was allocated); (b) all relevant documentation
CASS 6.3.1RRP
(1) 1A firm may deposit safe custody assets2 held by it on behalf of its clients into an account or accounts opened with a third party, but only if it exercises all due skill, care and diligence in the selection, appointment and periodic review of the third party and of the arrangements for the holding and safekeeping of those safe custody assets.222(1A) [deleted]66(2) [deleted]66(3) When a firm makes the selection, appointment and conducts the periodic review referred to 2under
CASS 6.3.2GRP
In discharging its obligations under CASS 6.3.1 R,6 a firm should also consider, as appropriate,6 together with any other relevant matters:6(1) the third party's performance of its services to the firm;6(2) the arrangements that the third party has in place for holding and safeguarding the safe custody asset;22(2A) market practices related to the holding of the safe custody asset that could adversely affect clients’ rights.8(3) current industry standard reports, for example "Assurance
CASS 6.3.2ARRP
(1) 6A firm must make a record of the grounds upon which it satisfies itself as to the appropriateness of its selection and appointment of a third party under CASS 6.3.1 R. The firm must make the record on the date it makes the selection or appointment and must keep it from that date until five years after the firm ceases to use the third party to hold safe custody assets belonging to clients.(2) A firm must make a record of each periodic review of its selection and appointment
CASS 6.3.4RRP
(1) Subject to (2), a6firm must only deposit safe custody assets2 with a third party in a jurisdiction which specifically regulates and supervises the safekeeping of safe custody assets2 for the account of another person8 with a third party who is subject to such regulation.622(2) A firm must not deposit safe custody assets2 held on behalf of a client with a third party in a third country8 which does not regulate the holding and safekeeping of safe custody assets2 for the
CASS 6.3.4BGRP
6A firm should consider carefully the terms of any agreement entered into with a third party under CASS 6.3.4A R. The following terms are examples of the issues that should be addressed in these agreements (where relevant):(1) that the title of the account in the third party's books and records indicates that any safe custody asset credited to it does not belong to the firm;(2) that the third party will hold or record a safe custody asset belonging to the firm'sclient separately
CASS 6.3.6ARRP
(1) 8A firm must not grant any security interest, lien or right of set-off to another person over clients’safe custody assets that enable that other person to dispose of the safe custody assets in order to recover debts unless condition (a) or (b) is satisfied:(a) those debts relate to:(i) one or more of the firm’sclients; or(ii) the provision of services by that other person to one or more of the firm’sclients; or(b) to the extent those debts relate to anything else then:(i)
CASS 6.3.6BGRP
8Under CASS 6.3.6AR(1)(a), a security interest, lien or right of set-off to facilitate the clearing or settlement of transactions referring to clients of the firm may be regarded as being granted in order to recover debts that relate to the provision of services to one or more clients.
CASS 6.3.6CGRP
(1) 8Under CASS 6.3.6AR(1)(b)(i) a security interest, lien or right of set-off may be regarded as being required by applicable law in a third country for example where:(a) because of applicable law it is mandatory for such a security interest, lien or right of set-off to be given in order for the safe custody assets to be held in that third country; or(b) (i) in the context of the service being provided for the firm’sclient the applicable law of that third country requires the
CASS 6.3.6DGRP
8To comply with CASS 6.3.6AR(2) and in relation to any security interests, liens or rights of set-off over safe custody assets, a firm should ensure that:(1) the written terms of its client contracts include the client’s agreement to another person having such a security interest, lien or right of set-off over the client’s assets; and(2) its books and records are able to show the safe custody assets in respect of which the firm is aware that such security interests, liens, or
CASS 11.13.2GRP
The debt management client money distribution rules seek, in the event of the failure of a CASS debt management firm or of an approved bank at which the CASS debt management firm holds client money, to protect client money and to facilitate the timely payment of sums to creditors or the timely return of client money to clients.
CASS 11.13.4RRP
If a primary pooling event1 occurs, then:2(1) all client money:2(a) held in the CASS debt management firm'sclient bank accounts; and (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) 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
CASS 11.13.5RRP
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).22
CASS 11.13.8RRP
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.
CASS 11.13.9RRP
The transferee must, within seven days after the transfer of client money under CASS 11.13.6 G notify clients that:(1) their money has been transferred to the transferee; and (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.
CASS 11.13.11RRP
(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) 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
CASS 11.13.12RRP
Money held in each client bank account of the firm must be treated as pooled and:(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) a new client money entitlement must be calculated for each client by the firm, to
CASS 11.13.14RRP
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).
CASS 7A.2.4RRP
If a primary pooling event occurs, then4:(1) (a) in respect of a sub-pool,4 the following is treated as a single notional pool of client money for the beneficiaries of that pool:45(i) any client money held in a client bank account of the firm relating to that sub-pool; and5(ii) any client money held in a client transaction account of the firm relating to that sub-pool, except for client money held in a client transaction account at an authorised central counterparty3 or a clearing
CASS 7A.2.4A-2GRP
7Where regulation 10C(3) of the IBSA Regulations does apply, Firm A should, in advance of the transfer under CASS 7A.2.4R(4), obtain a contractual undertaking from Firm B that:(1) Firm B will comply with the client’s request for a ‘reverse transfer’ as defined in regulation 10C of the IBSA Regulations; and(2) Firm B will notify the client, within 14 days of the transfer of that client’ssafe custody asset having commenced, that the client can demand a ‘reverse transfer’ as defined
CASS 7A.2.4AGRP
(1) 1Under EMIR, where a firm that is a clearing member4 of an authorised central counterparty defaults, the authorised central counterparty may:4(a) portclient positions where possible; and(b) after the completion of the default management process:(i) return any balance due directly to those clients for whom the positions are held, if they are known to the authorised central counterparty; or(ii) remit any balance to the firm for the account of its clients if the clients are
CASS 7A.2.5RRP
(-2) (a) Subject to paragraph (-2)(b), each client’s entitlement to client money in a notional pool is calculated with reference to the client money requirement as shown by an internal client money reconciliation carried out in accordance with CASS 7.15.15R(4)(a) (Internal client money reconciliations) as at the primary pooling event.7(b) If, as at the primary pooling event, the firm had entered in to one or more cleared margined transactions through the use of a client transaction
CASS 7A.2.5AGRP
(1) (a) 7The effect of CASS 7A.2.5R(-2)(b) is that the client equity balance for the relevant cleared margined transaction is with reference to the eventual close out or ‘hindsight’ value of the transaction, instead of being a notional balance as at the primary pooling event under CASS 7.16.28R.(b) CASS 7A.2.5R(-2)(b) applies in respect of cleared margined transactions that a firm had entered into for any client, including for indirect clients where the firm is itself a client
CASS 7A.2.6ARRP
(1) 7Before a firm ceases to treat a balance of client money in a notional pool as client money by transferring it to itself under CASS 7.17.2R(5) it must:(a) (subject to paragraph (2)) attempt to distribute the balance to the relevant client or transfer it to another person for safekeeping on behalf of the client in accordance with CASS 7A.2.4R (Pooling and distribution or transfer); (b) (subject to paragraph (3)) take reasonable steps to notify any client in respect of whom
CASS 7A.2.6CERP
(1) 7Reasonable steps in CASS 7A.2.6AR(1)(b) include the following course of conduct:(a) determining, as far as reasonably possible, the correct contact details for the relevant client;(b) for a client for whom the firm has evidence that it was a professional client for the purposes of the client money rules at the time of the primary pooling event:(i) writing to the client at the last known address either by post or by electronic mail:(A) to inform it of the firm’s intention
CASS 7A.2.6DGRP
7For the purpose of CASS 7A.2.6CE(1)(a), a firm may use any available means to determine the correct contact details for the relevant client, including: (1) telephoning the client;(2) searching internal and/or public records;(3) media advertising;(4) mortality screening; and(5) using credit reference agencies or tracing agents.
CASS 7A.2.6FRRP
(1) 7A firm must make a record of any balance under CASS 7A.2.6AR(1)(c)(i) or (ii) which is to be applied towards any costs or towards any shortfall in the relevant notional pool in accordance with CASS 7A.2.6AR(1)(c) or (d) respectively, immediately before taking such steps.(2) The record under paragraph (1) must state:(a) the amount of the balance of client money;(b) the name and contact details of any client to whom that balance was allocated according to the firm’s records
CASS 7A.2.10ARRP
7A firm that is operating the normal approach to segregation under CASS 7.13 (Segregation of client money) which becomes liable to pay money to a client after a primary pooling event must promptly, and in any event no later than one business day after the money is due and payable, pay the money:(1) to, or to the order of, the client; or(2) into a client bank account that does not contain any client money forming part of a notional pool under CASS 7A.2.4R(1).
CASS 7A.2.10BGRP
7Where the firm has payment instructions from the client, the firm should pay the money to the order of the client, rather than into a client bank account.
CASS 7.13.7GRP
Firms should ensure that clients and third parties make transfers and payments of any money which will be client money directly into the firm's client bank accounts.
CASS 7.13.10RRP
When a firm makes the selection, appointment and conducts the periodic review of a CRD credit institution, a bank or a qualifying money market fund, it must take into account:(1) the expertise and market reputation of the third party with a view to ensuring the protection of clients’ rights6; and(2) any legal or regulatory6 requirements or market practices related to the holding of client money that could adversely affect clients' rights. [Note: article 4(2) second sub-paragraph
CASS 7.13.18GRP
A designated client bank account may be used for a client only where that client has consented to the use of that account. If a firm deposits client money into a designated client bank account then, in the event of a secondary pooling event in respect of the relevant bank, the account will not be pooled with any general client bank account or designated client fund account.
CASS 7.13.19GRP
A designated client fund account may be used for a client only where that client has consented to the use of that account and all other designated client fund accounts which may be pooled with it. For example, a client who consents to the use of bank A and bank B should have his money held in a different designated client fund account at bank B from a client who has consented to the use of banks B and C. If a firm deposits client money into a designated client fund account then,
CASS 7.13.28RRP
(1) A firm must inform a client that money placed with a qualifying money market fund will not be held in accordance with the requirements for holding client money.6(2) A firm must ensure that, having provided the information to the client under (1), the client gives its explicit consent to the placement of their money in a qualifying money market fund. 6[Note: article 4(2) third sub-paragraph to the MiFID Delegated Directive6]
CASS 7.13.29AGRP
6A firm may comply with CASS 7.13.28 R(1) by informing the client that the units or shares in the qualifying money market fund will be held as safe custody assets.
CASS 7.13.30RRP
A firm may segregate client money in a different currency from that in which it was received or in which the firm is liable to the relevant client. If it does so the firm must ensure that the amount held is adjusted each day to an amount at least equal to the original currency amount (or the currency in which the firm has its liability to its clients, if different), translated at the previous day's closing spot exchange rate.
CASS 7.13.36RRP
(1) A firm must allocate any client money it receives to an individual client promptly and, in any case, no later than ten business days following the receipt (or where subsequent to the receipt of money it has identified that the money, or part of it, is client money under CASS 7.13.37 R, no later than ten business days following that identification). (2) Pending a firm's allocation of a client money receipt to an individual client under (1), it must record the received client
CASS 7.13.38BGRP
7CASS 7A.2.10AR and CASS 7A.2.10BG (Money due to a client from a firm after a primary pooling event) apply to a firm following a primary pooling event in respect of money due to a client from a firm.
CASS 7.13.39RRP
Pursuant to the client money segregation requirements, a firm that is operating the normal approach and is liable to pay money7 to a client must7 promptly, and in any event no later than one business day after the money is due and payable, pay the money: (1) to, or to the order of, the client; or(2) into a client bank account.
CASS 7.13.40GRP
Where the firm has payment instructions from the client the firm should pay the money to the order of the client, rather than into a client bank account.
CASS 7.13.54GRP
(1) In certain circumstances, use of the normal approach for a particular business line of a firm could lead to significant operational risks to client money protection. These may include a business line under which clients' transactions are complex, numerous, closely related to the firm's proprietary business and/or involve a number of currencies and time zones. In such circumstances, subject to meeting the relevant criteria and fulfilling the relevant notification and audit
CASS 7.10.7CRRP
4Once an election made by a firm under CASS 7.10.7AR becomes effective, and until it ceases to be effective:(1) the firm must treat all the money referred to under CASS 7.10.7AR(1) in accordance with the election; and (2) for the purposes of (1), this chapter applies to the firm in the same way that it applies to a firm that receives and holds money in the course of or in connection with its designated investment business, except that:(a) CASS 7.10.10R will not apply to the money
CASS 7.10.7FGRP
(1) 4Where a firm has made an election under CASS 7.10.7AR: (a) it should treat money held for a client as client money both in the course of or in connection with: (i) operating an electronic system in relation to lending; and(ii) operating an electronic system in relation to non-P2P agreements;(b) (a) is regardless of whether, at the time the firm is holding the money, the client could or could not be a lender under a P2P agreement; and(c) under SYSC 4.1.8ER(2) it will be not
CASS 7.10.13GRP
When a firm undertakes a range of business for a professional client and has separate agreements for each type of business undertaken, the firm may treat client money held on behalf of the client differently for different types of business; for example, a firm may, under CASS 7.10.10 R or CASS 7.10.12 R, elect to segregate client money in connection with securities transactions and not segregate (by complying with CASS 7.10.10 R or CASS 7.10.12 R) money in connection with contingent
CASS 7.10.16RRP
In relation to the application of the client money rules (and any other rule in so far as it relates to matters covered by the client money rules) to the firms referred to in (1) and (2), the following is not client money:(1) any deposits within the meaning of the CRD held by a CRD credit institution; and[Note: article 16(9)7 of MiFID and article 4(1)7 of the MiFID Delegated Directive7](2) any money held by an approved bank that is not a CRD credit institution in an account with
CASS 7.10.19RRP
A firm holding money in either of the ways described in CASS 7.10.16 R must, before providing designated investment business services to the client in respect of those sums, notify the client that:(1) the money held for that client is held by the firm as banker and not as a trustee under the client money rules; and(2) if the firmfails, the client money distribution and transfer rules8 will not apply to these sums and so the client will not be entitled to share in any distribution
CASS 7.10.20RRP
A firm holding money in either of the ways described in CASS 7.10.16 R in respect of a client and providing the services to it referred to in CASS 7.10.19 R must:(1) explain to its clients the circumstances, if any, under which it will cease to hold any money in respect of those services as banker and will hold the money as trustee in accordance with the client money rules; and(2) set out the circumstances in (1), if any, in its terms of business so that they form part of its
CASS 7.10.21GRP
Where a firm receives money that would otherwise be held as client money but for CASS 7.10.16 R:(1) it should be able to account to all of its clients for sums held for them at all times; and(2) that money should, pursuant to Principle 10, be allocated to the relevant client promptly. This should be done no later than ten business days after the firm has received the money.
CASS 7.10.22RRP
If a CRD credit institution or an approved bank that is not a CRD credit institution wishes to hold client money for a client (rather than hold the money in either of the ways described in CASS 7.10.16 R) it must, before providing designated investment business services to the client, disclose the following information to the client:(1) that the money held for that client in the course of or in connection with the business described under (2) is being held by the firm as client
CASS 7.10.23GRP
Firms carrying on MiFID business are reminded of their obligation to supply investor compensation scheme information to clients under COBS 6.1.16 R or COBS 6.1ZA.22R9 (Compensation Information).7
CASS 7.10.25GRP
A firm that holds money on behalf of, or receives money from, an affiliated company in respect of MiFID business must treat the affiliated company as any other client of the firm for the purposes of this chapter.
CASS 7.10.26RRP
A firm that holds money on behalf of, or receives money from, an affiliated company in respect of designated investment business which is not MiFID business must not treat the money as client money unless:(1) the firm has been notified by the affiliated company that the money belongs to a client of the affiliated company; or(2) the affiliated company is a client dealt with at arm's length; or(3) the affiliated company is a manager of an occupational pension scheme or is an overseas
CASS 7.10.27RRP
The client money rules do not apply with respect to coins held on behalf of a client if the firm and the client have agreed that the money (or money of that type) is to be held by the firm for the intrinsic value of the metal which constitutes the coin.
COBS 9.2.1RRP
(1) A firm must:3(a) take reasonable steps to ensure that a personal recommendation, or a decision to trade, is suitable for its client; and3(b) ensure that any life policy proposed is consistent with the client’s insurance demands and needs.3(2) When making the personal recommendation or managing his investments, the firm must obtain the necessary information regarding the client's:(a) knowledge and experience in the investment field relevant to the specific type of designated
COBS 9.2.2RRP
(1) A firm must obtain from the client such information as is necessary for the firm to understand the essential facts about him and have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of managing:(a) meets his investment objectives;(b) is such that he is able financially to bear any related investment risks consistent with his investment
COBS 9.2.3RRP
The information regarding a client’s knowledge and experience in the investment field includes, to the extent appropriate to the nature of the client, the nature and extent of the service to be provided and the type of product or transaction envisaged, including their complexity and the risks involved, information on:(1) the types of service, transaction and designated investment with which the client is familiar;(2) the nature, volume, frequency of the client’s transactions in
COBS 9.2.4RRP
A firm must not encourage a client not to provide information for the purposes of its assessment of suitability.2
COBS 9.2.5RRP
A firm is entitled to rely on the information provided by its clients unless it is aware that the information is manifestly out of date, inaccurate or incomplete.2
COBS 9.2.6RRP
If a firm does not obtain the necessary information to assess suitability, it must not make a personal recommendation to the client or take a decision to trade for him.2
COBS 9.2.7GRP
Although a firm may not be permitted to make a personal recommendation or take a decision to trade because it does not have the necessary information, its client may still ask the firm to provide another service such as, for example, to arrange a deal or to deal as agent for the client. If this happens, the firm should ensure that it receives written confirmation of the instructions. The firm should also bear in mind the client's best interests rule and any obligation it may have
CREDS 3A.5.1RRP
(1) 1The requirements in this section apply:(a) (excluding the requirements in CREDS 3A.5.6R and CREDS 3A.5.7R) to a firm when dealing in or arranging a deal in a deferred share with or for a relevant credit union client where the relevant credit union client is to enter into the deal as buyer; and(b) (excluding the requirements in CREDS 3A.5.3R to CREDS 3A.5.5R) to a firm when:(i) communicating a direct offer financial promotion relating to credit union subordinated debt to a
CREDS 3A.5.3RRP
(1) The firm must:(a) give the relevant credit union client a risk warning in the form in (2) on paper or another durable medium; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has read it, in good time before the relevant credit union client has committed to buy the deferred share.(2) “The investment to which this communication relates is a deferred share. Direct investment in deferred shares can be high risk
CREDS 3A.5.4RRP
(1) The firm must:(a) give the relevant credit union client a statement in the form in (2) on paper or another durable medium; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has signed it,in good time before the relevant credit union client has committed to buy the deferred share.(2) “I make this statement in connection with my proposed investment in deferred shares issued by a credit union. I have been made aware
CREDS 3A.5.5RRP
If the relevant credit union client is not receiving advice that constitutes a regulated activity on the deferred share, the firm must assess whether investment in the deferred share is appropriate for the relevant credit union client, complying with the requirements in COBS 10 as if the firm were providing non-advised investment services in the course of MiFID or equivalent third country business.
CREDS 3A.5.6RRP
(1) The firm must:(a) include a risk warning in the form in (2) for any direct offer financial promotion to a relevant credit union client relating to credit union subordinated debt; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has read the risk warning,in good time before the relevant credit union client makes the subordinated loan to the credit union.(2) “The investment to which this financial promotion relates
CREDS 3A.5.7RRP
(1) The firm must:(a) include a statement in the form in (2) in any direct offer financial promotion to a relevant credit union client relating to credit union subordinated debt; and(b) obtain confirmation in writing from the relevant credit union client that the relevant credit union client has signed the statement,in good time before the relevant credit union client makes the subordinated loan to the credit union.(2) “I make this statement in connection with my proposed making
CREDS 3A.5.8RRP
(1) Where a firm applies any exemption set out in COBS 22.2.4R under CREDS 3A.5.1R(3)2, any reference in COBS 22.2.4R to mutual society share must be read as though it includes a deferred share or credit union subordinated debt, as applicable.(2) For the purposes of any assessments or certifications required by the exemptions in COBS 22.2.4R, as applied for the purposes of this section under CREDS 3A.5.1R(3)2, any reference in COBS 4.12 provisions to non-mainstream pooled investments
CASS 9.4.1GRP
(1) Firms to which COBS 6.1 applies are reminded that, under COBS 6.1.7R, a firm that holds clientdesignated investments or client money must provide its clients with specific information about how the firm holds those clientdesignated investments and client money and how certain arrangements might give rise to specific consequences or risks for those clientdesignated investments and client money.2(2) COBS 6.1 (Information about the firm and compensation information (non-MiFID
CASS 9.4.2RRP
1A firm to which COBS 6.1 applies2 that holds custody assets or client money must, in relation to its business for which COBS 6.1 applies2:(1) provide the information in COBS 6.1.7 R for any custody assets the firm may hold for a client, including any custody assets which are not designated investments; and(2) provide the information in COBS 6.1.7 R and in (1) to each of its clients.
CASS 9.4.2ARRP
(1) 2Firms to which COBS 6.1ZA applies are reminded of the requirements under article 49 of the MiFID Org Regulation (which are directly applicable to some firms and which are also applied to firms in other circumstances under COBS 6.1ZA.3R3) to provide certain information to a client when the firm is holding the client’sfinancial instruments or funds (see COBS 6.1ZA.9EU3) and the requirement under COBS 6.1ZA.10AR when a firm doing insurance distribution activities is holding
CASS 9.4.2BRRP
2A firm to which COBS 6.1ZA applies that holds custody assets or client money must, in relation to its business for which COBS 6.1ZA applies:(1) provide the information referred to in paragraphs 2 to 7 of article 49 of the MiFID Org Regulation for any custody asset that the firm may hold for a client, including:(a) any custody asset which is a designated investment but not a financial instrument; and(b) any custody asset which is neither a designated investment nor a financial
CASS 9.4.3GRP
1A firm should provide the information required in CASS 9.4.2 R or CASS 9.4.2BR (as applicable)2 to any client for whom it holds custody assets or client money, including a retail client, a professional client and an eligible counterparty.
CASS 9.4.4GRP
(1) 1Firms are reminded of their obligation, under COBS 4.2.1 R, to be fair, clear and not misleading in their communications with clients.(2) Firms are also reminded of the requirements in respect of communications made to retail clients under COBS 4.5 and clients under article 44 of the MiFID Org Regulation and COBS 4.5A (as applicable)2.
CASS 9.5.1GRP
(1) Firms to which COBS 16.4 applies are reminded that, under COBS 16.4, they are required to send to each of their clients at least once a year a statement in a durable medium of those designated investments and/or client money they hold for that client. A firm which manages investments may provide this statement in its periodic statement, as required under COBS 16.3.2(2) COBS 16.4 (Statements of client designated investments or client money) applies, in accordance with COBS
CASS 9.5.3GRP
Subject to CASS 9.5.5AR and2CASS 9.5.6 R, CASS 9.5.4R, CASS 9.5.4BR2 and CASS 9.5.5 R require firms to comply with a client's request for information on the custody assets and/or client money the firm holds for a client under CASS 6 and/or CASS 7, and such request may be made by a client at any time.
CASS 9.5.4RRP
When a firm to which COBS 16.4 applies2 receives a request, made by a client, or on a client's behalf, for a statement of the custody assets and/or client money that the firm holds for that client, the firm must provide the client with the statement requested in a durable medium.
CASS 9.5.4BRRP
2When a firm to which COBS 16A applies receives a request, made by a client, or on a client’s behalf, for a statement of the custody assets that the firm holds for that client, it must provide the client with a statement in a durable medium in relation to any custody assets that are not financial instruments.
CASS 9.5.5RRP
When a firm receives a request, made by a client, or on a client's behalf, for a copy of any statement of custody assets and/or client money previously provided to that client, the firm must provide the client with the copy of the statement requested in a durable medium and within five business days following the receipt of the request.
CASS 9.5.5ARRP
2A firm is not required to provide a client with a statement under CASS 9.5.4R or CASS 9.5.4BR, or a copy of a statement under CASS 9.5.5R (as applicable) where the following conditions are met: (1) the firm provides the client with access to an online system, which qualifies as a durable medium;(2) up-to-date statements of the client’scustody assets and/or client money can be easily accessed by the client via the system under (1); and (3) the firm has evidence that the client
DISP 1.1A.3GRP
A MiFID complaint is, amongst other things, a complaint to which article 26 of the MiFID Org Regulation applies, being a complaint about:(1) the provision of investment services or ancillary services to a client by an investment firm;(2) the provision of one or more investment services to a client by a CRD credit institution; (3) selling structured deposits to clients, or advising clients on them, where the sale or advice is provided by an investment firm or a CRD credit institution;(4)
DISP 1.1A.5GRP
In contrast to the other provisions in DISP 1 which generally apply to complaints from eligible complainants, subject to DISP 1.1A.6R: (1) the obligations in this section that apply to the MiFID complaints of MiFID investment firms, apply to complaints from “clients” as defined in the UK provisions which implemented2MiFID (which includes retail clients, professional clients and (in relation to eligible counterparty business) eligible counterparties; and(2) the obligations in
DISP 1.1A.10UKRP
2Investment firms shall publish the details of the process to be followed when handling a complaint. Such details shall include information about the complaints management policy and the contact details of the complaints management function. This information shall be provided to clients or potential clients, on request, or when acknowledging a complaint. [Note: article 26(2) of the MiFID Org Regulation]
DISP 1.1A.12UKRP
2Investment firms shall establish, implement and maintain effective and transparent complaints management policies and procedures for the prompt handling of clients’ or potential clients’ complaints. [Note: first paragraph, article 26(1) of the MiFID Org Regulation]
DISP 1.1A.16UKRP
2Investment firms shall enable clients and potential clients to submit complaints free of charge. [Note: article 26(2) of the MiFID Org Regulation]
DISP 1.1A.25UKRP
2Investment firms shall communicate the firm’s position on the complaint to clients or potential clients and inform the clients or potential clients about their options, including that they may be able to refer the complaint to an alternative dispute resolution entity, as defined in regulation 4 of the ADR Regulations,2 or that the client may be able to take civil action. [Note: article 26(5) of the MiFID Org Regulation. See the ADR Directive.2]
DISP 1.1A.26RRP
The explanation given by MiFID investment firms to clients or potential clients in accordance with DISP 1.1A.25UK2 must also: (1) refer to the fact that the complainant has made a MiFID complaint and inform the complainant that the MiFID investment firm now considers the MiFID complaint to have been resolved;(2) inform the complainant that if, still dissatisfied with the resolution of the MiFID complaint, the complainant may be able to refer it to the Financial Ombudsman Service; (3)
DISP 1.1A.30UKRP
2 Investment firms shall communicate the firm’s position on the complaint to clients or potential clients and inform the clients or potential clients about their options, including that they may be able to refer the complaint to an alternative dispute resolution entity, as defined in regulation 4 of the ADR Regulations,2 or that the client may be able to take civil action. [Note: article 26(5) of the MiFID Org Regulation. See the ADR Directive.2]
DISP 1.1A.31RRP
The explanation given by MiFID investment firms to clients or potential clients in accordance with DISP 1.1A.30UK2 must also:(1) enclose a copy of the Financial Ombudsman Service's standard explanatory leaflet; (2) provide the website address of the Financial Ombudsman Service;(3) inform the complainant that if, still dissatisfied with the respondent's response, the complaint may now be referred to the Financial Ombudsman Service; and (4) indicate whether or not the respondent
CASS 6.4.1RRP
(1) 1A firm must not enter into arrangements for securities financing transactions in respect of safe custody assets2 held by it on behalf of a client or otherwise use such safe custody assets2 for its own account or the account of any other person or6client of the firm, unless:22(a) the client has given express prior consent to the use of the safe custody assets2 on specified terms; and2(b) the use of that client'ssafe custody assets2 is restricted to the specified terms
CASS 6.4.1BGRP
(1) 6Prior express consent by clients should be given and recorded by firms in order to allow the firm to demonstrate clearly what the client agreed to and to help clarify the status of safe custody assets. (2) Clients’ consent may be given once at the start of the commercial relationship, as long as it is sufficiently clear that the client has consented to the use of their safe custody assets. (3) Where a firm is acting on a client instruction to lend safe custody assets and
CASS 6.4.1CRRP
6A firm must take appropriate measures to prevent the unauthorised use of safe custody assets for its own account or the account of any other person, such as: (1) the conclusion of agreements with clients on measures to be taken by the firm in case the client does not have enough provision on its account on the settlement date, such as borrowing of the corresponding securities on behalf of the client or unwinding the position;(2) the close monitoring by the firm of its projected
CASS 6.4.2ARRP
6A firm must adopt specific arrangements for all clients to ensure that the borrower of clientsafe custody assets provides the appropriate collateral and that the firm monitors the continued appropriateness of such collateral and takes the necessary steps to maintain the balance with the value of the clientsafe custody assets.[Note: article 5(4) of the MiFID Delegated Directive]
CASS 6.4.2BGRP
6The requirement to monitor collateral under CASS 6.4.2AR applies to a firm where it is party to a securities financing transaction, including when acting as an agent for the conclusion of a securities financing transaction or in the case of a tripartite transaction between a borrower, a client and the firm.[Note: recital 9 to the MiFID Delegated Directive]
CASS 6.4.3RRP
Where a firm uses safe custody assets2 as permitted in this section, the records of the firm must include details of the client on whose instructions the use of the safe custody assets2 has been effected, as well as the number of safe custody assets2 used belonging to each client who has given consent, so as to enable the correct allocation of any loss.[Note: article 5(2), second sub-paragraph of the MiFID Delegated Directive6]222
CASS 11.10.1RRP
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.
CASS 11.10.3RRP
The circumstances referred to in CASS 11.10.1 R are:(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) 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
CASS 11.10.4RRP
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) as soon as reasonably practicable and within the five business day period, inform the client's creditors of
CASS 11.10.5RRP
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) inform the client of the delay and the reason for the delay;(2) inform the client of the risks and implications
CASS 11.10.6RRP
(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) Paragraph (1) does not apply in the circumstances
CASS 11.10.7GRP
Putting a client into the position he would have been in had the delay not occurred under CASS 11.10.6 R should include paying to the client a sum equivalent to the amount of any additional interest which would not have accrued but for the delay and any default charges that have been applied to the account as a result of the delay.