A CASS Reflection

19 October 2018

As the second year under the FRC CASS (Client Assets) standard draws to a close, it’s an ideal time to reflect, revitalise and prepare for the year ahead. Working with over 70 CASS firms in the banking sector, we’ve collated our experiences from the last 12 months to provide insights into the trends/themes we’ve observed in CASS.

Over a series of blogs, we will share our findings on hot topics affecting the CASS world. We begin with a retrospective look at the industry over the last year, highlighting the good and the not so good.

CAAS blog

What are firms doing well?

We have seen improvements in a number of areas, most significantly the increase in firms’ collective knowledge of the CASS rules and how it applies to their businesses. Operational teams within firms demonstrated that they are more aware of and have a better understanding over the CASS rules; translating into stronger control environments and good control governance leading to an increase in the proportion of self-identified breaches. This positive change appears to be a product of better CASS training, more experience with the FRC assurance standard and responding to feedback from CASS forums and consultants. Further, this demonstrates how effective it has been to change the FRC standard to focus more on CASS controls.

Where are firms falling short?

Governance and Oversight - The CASS Footprint

Simply having the knowledge is not always enough if it isn’t properly articulated, e.g. control matrices were often incomplete, missing relevant IT systems and sometimes missed whole business lines. Having a complete controls matrix is vital for good governance as it should be the foundation of management information. It is also the first step to standardising and streamlining processes in order to make the control environment more efficient.

Operations - Technology, Manual Controls and Processes

We’ve seen some limited growth in technology usage, particularly in the automation of simple repetitive tasks, e.g. use of bots for reconciliations and data entry across systems. However, these examples are few and far between. We encourage firms to explore the wealth of technological tools out there and consider how they could be applied within their own businesses to offer deeper insights into their control environment, cut costs and focus labour on more sophisticated tasks.

Technical - Mandates

Application of the CASS 8 rules is a deceptively complex area where firms are not always recognising all situations where they are operating under a mandate. A client providing authority over the phone for a one off transaction could constitute a mandate if the information is retained. Similarly, firms could still be subject to the mandate rules even where they do not hold client money or custody assets.

With continuous focus from regulators and rapid technological developments, the CASS landscape is constantly evolving and with it, so must the firms that operate within. While these are just a few general themes, we hope they help to stimulate ideas of what particular challenges and opportunities may be on the horizon for your firm. What other factors should you consider and are you ready to innovate and adapt to put your firm in the best possible position for the future?

Look out for our next blog post where we will be discussing outsourcing arrangements.

 

Swathi Thalinki

Swathi Thalinki | Manager
Profile | Email | +44 (0)7753 458992

Anthony  Lau

Anthony Lau | Senior Associate
Profile | Email | +44 (0)7841 071764

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