Planning for your annual CASS Audit

Scale & Grow Partner fscom are a UK-based regulatory compliance consultancy firm that provides services to businesses in the financial services sector.

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Many UK investment firms that hold and/or control client money and assets must undertake an annual CASS audit as required by the Financial Conduct Authority (FCA). With the FCA’s increasing focus on consumer protection and the safeguarding of client assets, it’s critical for firms to demonstrate robust compliance during these audits.

What you need to know about a CASS Audit

CASS (or Client Asset Sourcebook) audits are annual, retrospective evaluations to ensure that firms have maintained proper systems and controls to comply with relevant regulations throughout the year, and that they meet these regulations by year-end. Adherence to Principle 10 of the FCA’s Principles for Businesses, which mandates adequate protection for client money and assets, is crucial. This is a part of the FCA’s ongoing initiative to put consumer protection at the forefront of business activities—a trend that is expected to continue.

Preparing for a CASS Audit

Preparation for a CASS audit involves multiple facets:

  • Understanding CASS Application: Firms must document where and how CASS applies to their operations and justify their compliance decisions.

  • Employee Training: It’s vital that employees involved in CASS-related activities are well-trained to understand and fulfill these requirements.

  • Robust Controls: Auditors will review how CASS has been applied across your business, emphasising the need for effective controls and governance, especially if third-party services are involved.

  • Comprehensive reporting and record-keeping: Detailed documentation of all CASS-related activities, reconciliations, and incident management is essential. Auditors will scrutinise any long-standing issues or breaches particularly severely.

Learning from Past Audits

fscom have identified eight common areas where auditors typically find issues:

  • Acknowledgement letters

  • Reconciliations

  • Complete data capture

  • Change management

  • Controls and governance

  • Policy accuracy

  • Third-party management

  • CASS record-keeping

Fostering a positive CASS culture

Creating a positive, proactive culture around CASS and risk management enables a more open and communicative environment within your company. Training and awareness are crucial; consider hosting or attending industry events and webinars to enhance understanding and compliance across your team.