CASS Resolution Pack: What It Must Contain and Who Owns It

What the Resolution Pack Is For

The CASS resolution pack was introduced by the FSA in 2012, after the failure of Lehman Brothers showed how long it could take to return client assets when records were scattered or incomplete. The rules are in chapter 10 of the Client Assets sourcebook (CASS 10), and the original reasoning is in the FSA’s policy statement PS12/6.

The purpose, in the FCA’s guidance at CASS 10.1.2G, is to make sure a firm maintains and can retrieve information that would, if it became insolvent, help an insolvency practitioner achieve a timely return of client money and safe custody assets to clients. It is a set of practical records that a stranger, without your staff, could use to find and return client assets.

Which Firms Need One

Under CASS 10.1.1R, the chapter applies to a firm when it holds financial instruments, or safeguards and administers investments, under CASS 6, and/or holds client money under CASS 7. A firm that is subject to CASS 6 only because it arranges safeguarding and administration of assets is excluded. The pack must be maintained at all times while the chapter applies, not built when trouble starts.

That brings in investment managers, wealth managers, stockbrokers, platforms and custodians that hold client money or assets. The FCA’s client money and assets pages set out the CASS firm classification: CASS small, medium or large, depending on the highest amounts of client money and safe custody assets held. The pack requirement applies to all three.

Insurance intermediaries holding client money under CASS 5 are not named in CASS 10.1.1R, so a broker following CASS 5 is generally outside the chapter. A firm that has opted to apply CASS 7 to its insurance client money should check its position with its auditor or adviser. A short equivalent pack is still sensible practice. See our guide to CASS 5 client money for insurance intermediaries.

Payment and e-money firms have their own resolution pack rules in CASS 10A, under the FCA’s new safeguarding regime.

What It Must Contain

CASS 10.2.1R lists the core documents a firm must create for the pack. In summary, the pack must include:

1. A master document containing information sufficient to retrieve each document in the pack.
2. A document identifying the institutions the firm has appointed to hold client money or safe custody assets, including through agents. CASS 10.2.3R requires the full name of each institution, its postal and email address and telephone number, and the numbers of all accounts the firm has opened with it.
3. A document identifying each appointed representative, tied agent or other agent that receives client money or safe custody assets as the firm’s agent.
4. A document identifying key people: each senior manager, director and other individual critical or important to the operational functions behind the firm’s CASS 6 and CASS 7 obligations, with the nature of their responsibility, and the individual responsible for CASS operational oversight.
5. Copies of executed agreements with each of those institutions, including side letters and trust acknowledgement letters.
6. A document identifying group members and third parties involved in CASS operational functions, including any nominee company, with each group member’s type of entity, jurisdiction and functions.
7. Copies of executed agreements with those third parties, including side letters.
8. Where the firm relies on a third party, a document describing how to access the relevant information it holds and how to transfer client money or safe custody assets it controls.
9. The firm’s CASS procedures manual recording how client money and safe custody assets are managed, recorded and transferred.

CASS 10.3 then requires the pack to include, as applicable, records the firm already has to keep under CASS 6, CASS 7 and COBS. These include records of each client’s holdings, internal and external reconciliations, the firm’s assessment of third parties it selected, client categorisation records and client agreements.

Pack contents: owner and update frequency

Owners and frequencies are typical, not prescribed; the rule is that material inaccuracies are corrected within five business days.

The 48-Hour Retrieval Rule

CASS 10.1.7R requires a firm to have adequate arrangements so that an administrator, receiver, trustee, liquidator or similar officer appointed over it can retrieve each document as soon as practicable and in any event within 48 hours of appointment. The firm itself must be able to retrieve each document within 48 hours when it decides to, or when the FCA asks.

CASS 10.1.9E goes further. Certain items should be retrievable immediately, including the document identifying the institutions, the document identifying key individuals, the trust acknowledgement letters and the most recent internal and external reconciliations for client money and safe custody assets. Systems the pack depends on should remain accessible after insolvency.

The guidance at CASS 10.1.5G is clear that the 48 hours is a retrieval window, not time to start producing the documents. Everything must already exist.

Keeping It Up to Date

Under CASS 10.1.11R a firm must review the pack on an ongoing basis. Where a change of circumstances makes a CASS 10.2.1R document inaccurate in any material respect, the firm must correct it promptly and within five business days. The FCA’s own example is a change of institution, such as moving client money to a new bank.

The individual responsible for CASS operational oversight must report at least annually to the governing body on compliance with CASS 10 (CASS 10.1.14R). If a firm has not complied, or cannot comply, with the requirement to maintain the pack, it must notify the FCA in writing immediately.

How the Pack Supports an Insolvency Practitioner

Where a failed investment firm enters the special administration regime under the Investment Bank Special Administration Regulations 2011, the administrator’s first objective is to ensure the return of client assets as soon as is reasonably practicable. Outside special administration the practical task is the same: find every client money account and custody holding, reconcile to client records, and return them.

The resolution pack is the administrator’s starting map. It shows which banks and custodians to contact, which accounts exist, who ran the processes and how to get data out of outsourced systems. Without it, the administrator rebuilds that information from scratch, which delays returns and adds cost that clients ultimately bear.

Who Owns It: CASS Oversight Under the SMCR

Before the SMCR, CASS operational oversight at medium and large firms sat with an approved CF10a. The SMCR split that role.

• Prescribed responsibility (z): core and enhanced SMCR firms subject to CASS must allocate overall responsibility for compliance with CASS to a senior manager. In an enhanced firm this can be held by an SMF18 if that person holds no other SMF. See prescribed responsibilities explained and SMF18 recruitment.
• CASS operational oversight: under CASS 1A.3, a CASS medium or large firm must allocate the CASS operational oversight function to a single director or senior manager of sufficient skill and authority. If the senior manager holding PR (z) does not do this day to day, the person who does is typically within the certification regime. A CASS small firm must still allocate responsibility for CASS operational oversight to an appropriate individual.

CASS 10.1.15G reminds those with CASS oversight that their responsibilities include CASS 10. See our guide to CASS client money oversight and the certification regime.

The CASS Audit

A firm that holds client money or custody assets must have its auditor report on its compliance with CASS each year, in the client assets report submitted to the FCA. The auditor’s work covers whether the firm maintained systems adequate to comply with the CASS rules, including CASS 10.

Common Weaknesses

• A pack built once and never maintained: stale account lists, former staff, superseded agreements.
• A master document that does not work: broken links, references to folders an outsider cannot reach, or instructions that assume knowledge of internal systems.
• Access that would not survive insolvency: a pack stored behind staff logins or on systems that would be switched off, with no arrangement for an administrator to get in.
• Weak third-party detail: no practical instructions for getting data or transferring assets out of an outsourced platform or custodian.
• No annual report to the board, or a report that says the pack exists without saying whether it has been tested.

The Hiring Angle

The resolution pack is maintained by the people who run CASS day to day. In a larger firm that is a CASS manager or CASS officer, supported by finance for reconciliations and banking, compliance for agents and client records, and operations for third parties and systems. In a smaller firm it often falls to a finance manager or compliance officer with CASS experience.

The right experience is specific. Someone who has run CASS 7 reconciliations will understand the pack; a generalist often will not. Our post on why client money experience has to be specific explains the difference, and client money at a new brokerage covers the set-up decisions.

Firms often bring in an interim CASS specialist when the CASS manager leaves, ahead of a CASS audit with known gaps, after an adverse audit finding, or when moving banks, custodians or platforms. A fractional or interim appointment can rebuild and test the pack, then hand it to a permanent hire. We recruit for wealth managers and investment managers; for pay levels see our salary guide.

What to ask candidates

• Talk me through the master document at your last firm. Could an outsider use it?
• How did you test the 48-hour retrieval, and what did the test find?
• What did your last CASS audit find on CASS 10, and what did you change?

Frequently Asked Questions

What is a CASS resolution pack?

A set of documents and records, required by CASS 10, that would help an insolvency practitioner return client money and safe custody assets quickly if the firm failed.

How quickly must it be retrieved?

As soon as practicable and in any event within 48 hours, with some key documents retrievable immediately.

Do insurance brokers need one?

CASS 10 applies to firms holding client money under CASS 7 or custody assets under CASS 6, so a broker following CASS 5 is generally outside it. A simple equivalent pack is still good practice.

Who is accountable for it?

The senior manager holding the CASS prescribed responsibility, with day-to-day oversight by the person holding CASS operational oversight, who must report to the board on CASS 10 at least annually.