FCA custody rules
FCA custody rules

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • FCA custody rules
  • What do the FCA custody rules cover?
  • The CASS Regime
  • Changes to speed up the return of client money on insolvency
  • The impact of MiFID II on FCA client assets requirements
  • Application of the FCA custody rules
  • How client assets must be held
  • Depositing of client assets
  • The use of safe custody assets
  • Record keeping and accounting
  • more

What do the FCA custody rules cover?

The custody rules contained in chapter 6 of the Financial Conduct Authority's (FCA) Client Assets sourcebook (CASS) provide details on what a firm must do when it carries on the regulated activity of safeguarding and administering investments. See Practice Note: Safeguarding and administering investments for more information on this activity. The rules apply to custody assets, which include safe custody investments (which are designated investments which a firm receives or holds on behalf of a client), and any other assets that are held in the same portfolio as safe custody investments for the same client. A firm has discretion on how to apply the custody rules to its custody assets that are not safe custody investments, and must handle them in a manner that is appropriate to their nature and value.

The CASS Regime

Following a detailed review and consultation of the CASS regime by the FCA in order to address the specific failings of the old CASS regime that came into focus following the collapse of Lehman Brothers International (Europe) (LBIE), Lehman Brothers' principal UK trading subsidiary, the FCA made significant amendments to the pre-existing CASS requirements through the publication of FCA's policy statement PS14/9: Review of the client assets regime for investment business. The amendments particularly focused on CASS 6 (custody assets)