Following the end of the transitional period on 29 September 2011 the new rules on auditors’ client asset reports must be complied with.
On 1 October 2011, the following changes to the client money regime also come into effect:
- Medium and large CASS firms are required to have a person approved for the CF10a CASS Operational Oversight Function;
- Medium and large CASS firms must report certain information relating to CASS using the Client Money and Asset Return (CMAR); and
- All CASS Firms must comply with the new rules on custody liens and Title Transfer Collateral Agreements (TTCAs).
The CF10a function
All medium and large CASS firms must have a person approved for the CF10a controlled function from 1 October 2011. It can take up to three months for the FSA to approve an application for an approved person and it is hoped firms have already submitted their applications, or if not, are close to doing so. CASS small firms do not need to apply for a CF10a but they should already have in place somebody with CASS operational oversight.
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The new rules requiring CASS medium and large firms to submit a CMAR also come into force on 1 October 2011. On 18 August 2011, the FSA published a new webpage with some frequently asked questions on CMAR which is intended to help clarify the data that firms will be required to submit. CASS small firms do not need to submit a CMAR at present, but this is something the FSA is looking to introduce in the future after further public consultation.
Custody liens and TTCAs
On 29 July 2011 the FSA published consultation paper CP11/15 outlining further amendments to the CASS rules.
Since the prohibition on firms granting inappropriate general liens over client assets came into force on 1 March 2011, certain technical issues with the new rules have emerged. These issues generally relate to assets held overseas and in omnibus client accounts. To address these issues the FSA has proposed to apply interim relief by extending the transitional provisions and removing the prohibition on liens for all agreements currently subject to these rules from 1 October 2011 to 31 March 2012. In addition, the FSA propose to amend the CASS rules to permit liens over omnibus client accounts covering properly incurred charges and liabilities arising from the provision of custody services. In respect of overseas jurisdictions, the FSA proposes to change the rules relating to assets held overseas by amending the “necessary prohibition” to permit firms to grant liens over clients’ assets when necessary for that firm to gain access to a local market.
The FSA has also proposed extending the prohibition on the use of TTCAs with retail clients to include rolling spot forex contracts.