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Here to help with Regulation and Compliance

Compound Growth

17th December 2015

Increased Likelihood of FCA Client Money Audits

Since the FCA took on the role of City watchdog, they have paid particular attention to revamping the client money rules, with the final shake-up to the client assets protection regime being introduced for firms back in June.

Most firms will be well aware that failure to comply with the regulators Client Assets Sourcebook (CASS) can prove incredibly costly - as Bank of New York Mellon found out this year when they received a £126 Million fine for failing just that.

With all this regulatory attention being focused upon client money, it won’t be long before firms find the FCA knocking at their doors ready to undertake a Client Money Audit, but what can firms do to ensure they are complying and prepared?

Complete a Client Money Health Check

Completing a Client Money Health Check should help firms to identify if there are any areas of weakness within their systems and controls that are designed to protect client money.

The following high level questions should start to help your firm’s understanding of client money and assess how well you have addressed the protection of client money within your business and whether you need to review or revise your firm’s systems and controls.

It should be noted that whilst some of these questions may seem fairly rudimentary – and are by no means exhaustive - they are none-the-less important. Should the answer to any of these questions be a ‘No’ then this would indicate your firm needs to place additional focus upon protecting your clients’ money in accordance with regulatory requirements.

Segregated Client Accounts

Transactions involving Client Money:

In relation to client money transactions, is your firm able to answer ‘yes’ to all of the following questions? Again, answering a ‘No’ to any of these would suggest additional attention is required.

Your Firms Client Money Systems & Controls

Preparing for the worst

Since October 2012, firms that hold client money have been required to gather and maintain information regarding client money and so that in the event of a firm’s failure, custody assets and client money can be swiftly returned.

This information pack is called a Client Money and Assets Resolution Pack, or CASS RP for short.

Firms answering ‘no’ to the following should take immediate action to ensure they are complying with CASS.

Undertaking a Client Money Health Check

As mentioned, the above questions are merely a starting point for those firms wishing to undertake a Client Money Health Check and carrying one out that is applicable to your firm and its business will require much more in-depth review and analysis to ensure adequate CASS compliance exists within your firm.

Help with CASS RP and Client Money Health Check Support

The compliance support specialists at Compound Growth have a wealth of regulatory knowledge and experience and can help your firm undertake a Client Money Health Check relevant to your business.

In addition, if you are concerned that your Client Money & Client Assets Resolution Pack may be incomplete, missing core contents requirements and records or if you feel that the frequency of your CASS RP updates may be inadequate, please get in touch and we would be happy to assist.


Client Money Health Checks & Preparing for FCA Client Money Audit

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Client Money Rules in the News:

Jan15 saw the currency markets go crazy when the Swiss National Bank removed the Euro peg.

CHF stormed against EUR and GBP causing fallout and bankruptcy for City Forex broker, Alpari UK.

In steps the CASS Rules…

Fortunately for Alpari’s clients, their money was confirmed to be segregated in accordance with regulatory requirements with KPMG appointed to oversee the safe return of client assets.

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