A CASS-mas Carol 🎅

A CASS-mas Carol; Not so long ago the industry was a place full of historic issues and ghoulish CASS audits, where things that went bump had the power to cause catastrophic harm and misery to consumers and market order. Then came along a saviour – regulators, regulations, and focus, supported by a band of magical elves (bear with us on this) who set out to banish the tardy, counter the evil, and uplift the righteous to bring about good cheer and protection to all. This spooky tale and trip through time charts some of those highs and lows and celebrates the achievements of CASS and the spirit of Christmas future.

The Ghost of CASS-mas Past

It was a cold winter’s eve in 2008, with bankruptcy of major firms and an ensuing collapse snowballing into associated freezing and impacts to the markets. It culminated in the banking crisis and bailout of some major financial organisations, setting the scene for a seismic change in the financial services industry. This particularly heightened the need for and the role of the regulator, enforcement powers, and the ability to act where systemically important firms create a risk of harm to the consumers and/or markets within which they operate. 

The tone was set, the need for change clear to all, and the need to act never higher – if anybody needed to witness the effect of the past actions and impacts this was the catalyst for change.

The ensuing failures caused market shock and turmoil, with the subsequent bailouts and public ownership of major banks and financial institutions said to comprise of billions taken from government coffers and taxpayers’ funds. The impact was colossal, confidence at an all-time low and the future of finance in jeopardy. This funding, while gradually returned, remained in situ for a number of years following the re-stabilisation of the industry with confidence of investors severely affected, even to the present day.

The Ghost of CASS-mas Present

Fast forward to 2010 – the FCA launched the Client Assets Unit (the ‘Unit’), which brought together specialist risk, supervision, and policy functions. The culmination of Lehman’s bankruptcy was completed in 2012, prompting more review and assessment by the FCA in 2012 and underpinned wholesale changes to CASS delivered in PS14/9.

Looking back, it’s clear that banks, brokers, and all financial services segments have largely adopted and adapted well to the improved regulatory measures. This includes capital and liquidity measures being required to ensure that stability and confidence emerges intact with the client money and assets regime and principles being a key factor in doing so and the protection of consumers has been greatly advanced in doing so.

CASS really kicked into gear in the aftermath of Lehman’s collapse, but had in fact previously started life as part of the FSA (the FCA’s predecessor) in a lighter form. It was recognised that the depth of the rules lacked the requisite clarity for firms to adequately organise themselves to ensure appropriate treatment, protection, and in a worst case scenario, speedy return of assets to clients. 

The latest chapter of the CASS tale was born and has evolved in leaps and bounds under the FCA in recent years, remaining an important part of the regulatory objectives and approach for consumers and protection of assets with the wider associated industry conduct, responsibilities, and accountabilities.

With more twists and turns than a Dickens’ classic, the journey hasn’t always run smoothly – there have been abundant shocks, fines, failures, and exits in the period since the banking crisis. Even now, firms still find challenges with obligations and the devil remains firmly in the detail. Complexity and business change/growth adds to the risks, and even stable, fully-focused businesses cannot sit on their laurels. 

Established though the CASS regime may be, the audit outcomes still show repeat findings, common themes, and breaches aren’t always minimal, challenging firms to improve, mature, and add more expertise, capacity, and capabilities. This even applies to firms that consider themselves with a high degree of automation, protection, and consumer focus – things will (and do) continue to go wrong.

The Ghost of CASS-mas Yet to Come

Herald 2023 – it’s not all ghost stories and grim warnings, we promise. There are solutions that’ll help you to future proof and raise your standards in the CASS arena, working with seasoned experts who have seen common issues, resolved section 166 reviews, and enhanced firm’s capabilities, all of which are usually seen as a good approach to setting your firm’s CASS strategy and roadmap.

Grath is a collective of experienced industry practitioners, regulatory consultants, and regulators who have collaborated to design and deliver purpose-built CASS reconciliations, reporting, and risk/control governance and oversight. We’re different to established players in the arena and we think, once you’ve spoken to us, you’ll also feel that added value we can bring to support you, not only with our state-of-the-art technology and user experience, but with our partnership approach, ability to discuss challenges with you as peers, and give insight into your obligations and approach.

Interested in learning more?

If you’d like to know how Grath’s technology can help you avoid ghostly visitors from the past, present, or future then we’d love to talk. God bless us everyone, and Merry Christmas to you all.

Get in touch with us at Grath | Reinventing Regulatory Compliance