The ever increasing cost of CASS…and how technology can help

16 October 2017

Since the financial crisis, firms have been subject to an ever-increasing set of regulatory requirements, including CASS. Every set of regulation or change in requirements brings with it additional costs in the form of specialist staff, senior management time, system changes, legal fees...the list goes on.

CASS, specifically, has undergone huge changes in that time, not least in the last 2-3 years with an overhaul of the rules through PS14/09 and the introduction of the FRC Assurance Standard in 2016. The FRC Assurance Standard led firms to thoroughly analyse their end-to-end CASS relevant processes and controls, with most identifying significantly more key controls than previously documented.

While the exercise to formally document processes and controls has taken considerable effort, most firms agree that they have much more clarity over their CASS control framework than before, and their client’s assets are better protected as a result. This clarity has come at a cost, but also brings with it the opportunity to streamline CASS related processes to reduce the risk, cost and time allocated, and many firms are using technology solutions to help.

PwC is working on a number of technology solutions to help our clients with the burden of cost. Some examples include:

Process Intelligence tools

These tools forensically examine an end-to-end process, understanding the detailed flows of data between systems and pinpointing the exact timing of data changes. They can eliminate unnecessary flows of data that cause inefficiencies or errors, and identify idle time in a process.  This can be a result of some items requiring manual attention and therefore sitting in a person’s queue for too long, or a batch process runs later than it needs to. Process Intelligence can also help identify ways to reduce the time pressure on manual decisions required later in the process (such as whether to include or exclude client funds), reduce the amount of manual intervention, and reduce infrastructure costs.

Legal documentation

Optical Character Recognition (OCR) and the ability of computers to recognise phrases with the same meaning have led to the development of technology that can scan thousands of legal documents and identify the CASS relevant information (e.g. collateral thresholds, liens, use of sub-custodians, etc.) to automatically load into a firm’s systems.

Control framework mapping

System-based solutions that capture all CASS rules and changes to the rules. The system solution allows you to track what’s applicable to your business and how that links to the risks and controls in place within the firm. System based solutions provide you with a way to stay linked to change in the regulation, maintain attestations, escalations, track control issues/potential rule breaches, and have interactive reporting. They remove the need for large spreadsheet-based control maps and give the person responsible for CASS operational oversight a clear and real-time view of their CASS control framework, which can also be used to demonstrate to regulators and auditors how they oversee and monitor activities.

Eliminating the need for human decision making

Firms currently employ large teams responsible for resolving reconciliation breaks or making important include/exclude decisions. Robotics tools can be used to gather detailed data points around each decision and learn the patterns leading to one choice being made over another, in order to apply the same logic to future decisions and eliminate the need for manual intervention.

CASS is a complicated regulation that requires much interpretation depending on a firm’s business, product set and systems, however it does have a prescriptive and logical ruleset that lends itself to technology solutions. The technology is already available, so why not implement these tools together with other technological advances within your organisation to reduce the cost and risk of CASS?

Steven Linnegar | Director
Profile | +44 (0)20 7 804 9311
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