Skip to content
CityLearning
Regulatory & conduct

CASS (Client Assets Sourcebook)

CASS is the FCA Handbook sourcebook that protects client money and custody assets held by regulated firms. Its core regimes, CASS 6 for safe custody assets and CASS 7 for client money, require segregation, reconciliation and clear record-keeping so that, if a firm fails, clients' money and assets can be returned quickly and in full.

The Client Assets Sourcebook (CASS) is the FCA Handbook sourcebook that safeguards money and assets a regulated firm holds on behalf of its clients. CASS is one of the FCA’s highest supervisory priorities because failures can leave clients unable to recover their money when a firm collapses, as the complex client money returns following major firm failures have demonstrated. The two central regimes are CASS 6, covering safe custody assets, and CASS 7, covering client money.

Segregation, reconciliation and the statutory trust

Under CASS 7, client money must be segregated from the firm’s own funds and held in designated client bank accounts with approved banks. The money is held on a statutory trust for the clients, so it falls outside the firm’s estate on insolvency and is distributed under the client money distribution rules in CASS 7A. Firms must reconcile their records frequently, performing internal client money reconciliations (commonly daily) and external reconciliations against bank statements, and correct any shortfall or excess promptly. CASS 6 imposes equivalent protections for custody assets, including the use of properly documented custodians and regular safe custody reconciliations.

Governance and oversight

CASS-relevant firms are categorised as large, medium or small according to the value of client money and assets held. Larger firms must allocate the CASS oversight function (SMF18 under SM&CR for enhanced firms) to a named individual responsible for CASS compliance and reporting, and typically commission an annual CASS assurance audit reported to the FCA.

Who it applies to

Any firm that holds or controls client money or safe custody assets, including investment managers, brokers, platforms and some insurance intermediaries, must comply with the CASS rules relevant to its permissions and the scale of assets it holds.

COBS, FCA Handbook and operational resilience.

Frequently asked questions

What is the purpose of CASS?
The Client Assets Sourcebook (CASS) exists to protect client money and assets if a regulated firm becomes insolvent. CASS 6 governs the custody of clients' safe custody assets and CASS 7 governs client money. The rules require firms to segregate client money from their own, keep accurate books and records, perform regular internal and external reconciliations, and hold money in properly designated client bank accounts under the statutory trust created by the client money rules.
What is the CASS client money statutory trust?
Under CASS 7, client money is held by the firm on trust for its clients. This statutory trust means that, on the firm's insolvency, client money does not form part of the firm's estate and is instead distributed to clients in accordance with the client money distribution rules in CASS 7A. Firms must perform an internal client money reconciliation (typically daily) and an external reconciliation against bank records to confirm the correct amount is segregated.
Which firms have to comply with CASS?
CASS applies to any firm that holds or controls client money or safe custody assets in the course of regulated activity, including investment managers, brokers, platforms and certain insurance intermediaries. Larger firms are categorised as CASS large or CASS medium and must appoint a director or senior manager with oversight responsibility for CASS (the CASS oversight function, SMF18 / CF10a), and may require an annual CASS audit.

Reviewed by Margaret Hassett

← Back to the compliance glossary

Turn definitions into training

See how CityLearning's UK compliance courses help your team understand terms like this in practice.