CASS: Effective Record Keeping and Reconciliation Management

There are many things that can keep a CF10a up at night.

With the FCA cracking down on non-compliant firms, effective record keeping, and reconciliation management is essential in keeping businesses compliant and the FCA at bay.

According to the FCA, CASS 6.6.2 states that a “firm must keep such records and accounts as necessary to enable it at any time and without delay to distinguish safe custody assets held for one client from safe custody assets held for any other client, and the firm’s own applicable assets”.

But how do we ensure that Reconciliation teams are meeting these standards in their record keeping?

On a base level, it starts with maintaining up to date and accurate internal records of all custody asset transactions and account balances. Furthermore, the internal records must clearly distinguish safe custody assets held for clients from the firms own assets.

As well as maintaining client specific safe custody asset records, businesses must be held and maintained independently, without reliance on third party records.

This is all easier said than done. Many firms are still coming under fire for having gaps in their reports and financial service providers are looking for solutions for more effective reporting.

It seems that many firms are looking to technology to provide solutions to their regulatory requirements, with the FCA leading the way through their Tech Sprints organised by their Reg-tech Team.

The purpose of these meetings is to bring financial service providers, tech providers and practitioners together to look at the current regulatory challenges and develop innovative tech solutions to achieve smarter regulatory reporting.

There seems to be a clear message from the FCA through the Tech Sprints, that firms need to move on from “manual reporting” to a technology driven solution, that will eliminate the possibility of human error and multi-user issues.

This seems even more vital when it comes to reconciliation management, with firms facing possible S166s or even fines for inconsistencies in their recording. Stepping away from spreadsheets to an automated software, although presenting its own risks, is the logical next step in effective record keeping and reconciliation management.

However, having the right technology in place is only half the battle.

Aside from having the right data management tools in place, it’s paramount that firms understand their business and where the CASS rules apply.

Now that SMCR has been implemented, firms are forced to take a hard look at their governance issues, as well as assessing accountability.

Ensuring that you have the right people in the right roles that have the skill-sets to meet regulatory requirements is central to a firm’s compliance. Otherwise, you could be held responsible for any CASS failings, as a business or individually.

After ten years of CASS reporting, the rule book has been changed, and successful firms will not only take advantage of technological solutions to help manage CASS reporting, but also maintain a strong culture of responsibility and adaptability, to ensure they are properly taking care of clients assets.

FourthLine is home to a highly skilled and dedicated CASS recruitment team. With extensive knowledge of the CASS market and an unrivaled network of CASS specialists and expertise, we can provide you with the best solutions for all of your firm’s CASS resourcing requirements.