CASS OPERATIONAL OVERSIGHT CONTROLLED FUNCTION: CF10a
The regulator has indentified a potential risk in having responsibility for CASS split between numerous individuals and departments (compliance, operations, finance etc) and so has proposed the creation of CF10a – both a required function and a significant influence function (SIF) – to be held by only one person at each firm. This is relevant to all UK registered firms that hold client money / assets, as well as any overseas branches of such firms.
Firms are to be split into categories of small, medium and large based on the table below:
CASS firm type | Highest total amount of client money held during the firm’s last calendar year or as the case may be that it projects that it will hold during the current calendar year | Highest total value of safe custody assets held by the firm during the firm’s last calendar year or as the case may be that it projects that it will hold during the current calendar year |
CASS large firm | more than £1 billion | more than £100 billion |
CASS medium firm* | an amount equal to or greater than £1 million and less than or equal to £1 billion | an amount equal to or greater than £10 million and less than or equal to £100 billion |
CASS small firm | less than £1 million | less than £10 million |
*The definition shown here of ‘medium firm’ may change during the FSA’s data gathering period in 2011.
In other words, the size of your firm has nothing to do with the number of people you employ per se. For small firms CASS oversight does not necessarily need to be an FSA-approved person, but it is anticipated they will be either CF10 or another SIF holder. This will need to be well documented and if it is not the FSA will assume the CF10 is responsible.
For large and medium CASS firms you must apply and receive approval for the controlled function by 1st October 2011. For larger firms it is likely that a competency-based interview will be held by the regulator for the proposed CF10a person, so in order to be approved in time it is important to start the process now – you can put people forward from 1st May 2011 but you really need to have allocated someone already.
So, how will CF10 and CF10a work together? The FSA advises:
The CASS operational oversight function does not reduce the scope of the compliance function. A compliance officer must continue to advise and assist relevant persons within a firm to comply with the relevant obligations in relation to its holding of client money and client assets. They must also monitor and assess the adequacy and effectiveness of relevant measures and procedures taken by the firm. This will continue to include such duties as: ensuring that monitoring of the control environment is performed; and updating policies/procedures with Handbook changes.
If you are unsure about any element of CMAR or CF10a responsibility please contact us on 020 3008 6020 or email info@theconsultingconsortium.com
