The Client Assets Sourcebook (CASS) is the FCA Handbook sourcebook that safeguards money and assets a regulated firm holds on behalf of its clients. CASS is one of the FCA’s highest supervisory priorities because failures can leave clients unable to recover their money when a firm collapses, as the complex client money returns following major firm failures have demonstrated. The two central regimes are CASS 6, covering safe custody assets, and CASS 7, covering client money.
Segregation, reconciliation and the statutory trust
Under CASS 7, client money must be segregated from the firm’s own funds and held in designated client bank accounts with approved banks. The money is held on a statutory trust for the clients, so it falls outside the firm’s estate on insolvency and is distributed under the client money distribution rules in CASS 7A. Firms must reconcile their records frequently, performing internal client money reconciliations (commonly daily) and external reconciliations against bank statements, and correct any shortfall or excess promptly. CASS 6 imposes equivalent protections for custody assets, including the use of properly documented custodians and regular safe custody reconciliations.
Governance and oversight
CASS-relevant firms are categorised as large, medium or small according to the value of client money and assets held. Larger firms must allocate the CASS oversight function (SMF18 under SM&CR for enhanced firms) to a named individual responsible for CASS compliance and reporting, and typically commission an annual CASS assurance audit reported to the FCA.
Who it applies to
Any firm that holds or controls client money or safe custody assets, including investment managers, brokers, platforms and some insurance intermediaries, must comply with the CASS rules relevant to its permissions and the scale of assets it holds.