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CISI Unit 1 > Unit 1 - 4. The FCA's Conduct of Business and Client Assets Sourcebooks > Flashcards

Unit 1 - 4. The FCA's Conduct of Business and Client Assets Sourcebooks Flashcards

1
Q

Application and General Provisions of COBS
Firms subject to COBS

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

COBS = Conduct of Business Sourcebook
Part of FCA handbook

Aim of COBS is to move regulatory approach towards a focus on outcomes rather than compliance with detailed prescriptive rules. Also implemented the high-level provisions of MiFID.

COBS applies to UK firms conducting MiFID business for UK clients within the UK. After Brexit transitional period (12/2020), COBS handbook no longer applies to MiFID business of a UK MiFID firm carried on from an establishment in another EEA state.

The rules in COBS that derive from MiFID apply to a non-UK MiFID investment firm carrying out MiFID business within the UK. Eg. EEA firms operating a branch in the UK will be classified as third-country firm.

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2
Q

Activities subject to COBS
(and note on eligible counterparties loss of COBS)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A
  • designated investment business
  • long term insurance business in relation to life policies
  • accepting deposits (in part) (financial promotion rules and rules on preparing/providing products)

Certain COBS rules are disapplied for specific types of activity. For firms carrying on eligible counterparty business, lose parts of COBS.

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3
Q

Appointed Representatives (COBS)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Appointed representatives are exempt because they can carry out a range of regulated activities under the umbrella of their principal firm, which has accepted responsibility for the activity.

Firms must ensure appointed representative comply with rules when they communicate financial promotions. Reference is made in COBS to this as technically it is a exempt activity.

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4
Q

COBS and Electronic Media

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

FCA has reflected rules on electronic media.

Durable medium = paper or any instrument which lets recipient store the information to access in the future.

Specific website references the FCA requires:

  • client must consent for info that way
  • must be appropriate info in the context of the relationship
  • info must be up to date
  • website must be accessible continuously for such a period of time as reasonably expected
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5
Q

COBS 3, client categorisation

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firm is required to categorise its clients for MiFID business. If firm provides mix of MiFID and non-MiFID then categorise according to MiFID, as non-MiFID has modified rules.

Client: COBS defines client as someone to whom a firm provides, intends or has provided a service to in regards to regulated activity or ancillary service. Includes anyone firm communicates with (financial promotion).

Client categories: (determines protection level)

  • retail client
  • professional client
  • an eligible counterparty (ECP)
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6
Q

COBS 3, client recategorising

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Retail clients are anyone who isn’t a professional or eligible counterparty.

Professional may either be per se or elective.
Per se = entity required to be authorised/regulated or a large undertaking (BS €20m, Rev €40m or own funds €2m)

elective pro= retail client moves up if firm has assessed their expertise, experience and knowledge (passed qualitative and quantitative tests (ten trades, portfolio > €500k, 1 year pro experience)

Pro client may be treated as an elective ECP if it is:

  • a per se professional client
  • expressly agrees to be treated as an ECP

Classification is very fluid, can be different categories for different business, and can move between categories.

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7
Q

COBS 3, Client notification on classification and agent (A, B)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

If a firm knows that someone to whom it is providing services (A) is acting as the agent of another person (B), the firm should regard A as its client.

Exception, when it is agreed in writing with A that B should be treated as the client.

Exception, if involvement of A is mainly to reduce firms duties to B, then B should be treated as the client in any case.

Notification: New clients must be notified of how the client has classified them. Clients can ask to be reclassified. Firms must keep records of each agreement of classification.

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8
Q

Client Agreements

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Requirement to enter into a client agreement applies to designated investment business for a retail client and for MiFID business and ancillary services or equivalent third country business carried on for a retail and a professional client.

Firms written agreement sets out essential rights and obligations of the firm and its client. Agreement must be on paper or durable medium.

Client agreement records must be maintained for whichever is longest:

  • 5 years
  • duration of the relationship
  • for pension transfers, pension opt-outs or voluntary contributions then indefinitely
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9
Q

COBS Information requirements for clients

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms carrying on MiFID business, or equivalent third country business, must provide retail clients and professional clients (and potential clients) with appropriate information in a comprehensible form.

This is to let the client reasonably understand the nature and risks of the service and of the designated investments being offered.

A firm must also provide all clients with information about the firm. Name, address, policies etc.

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10
Q

COBS information requirements relating to managing investments

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

A firm that manages investments for a client must establish an appropriate method of evaluation and comparison, such a meaningful benchmark, based on the investment objectives of the client and the types of investment included in the client’s portfolio.

Allows the client to assess the firms performance.

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11
Q

COBS Information on safeguarding investments/money

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms holding client money or investments for any client are subject to the MiFID custody/client money rules. Must also provide list of info to client.

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12
Q

COBS disclosure of costs

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms must provide clients with information on the costs and charges to which they will be subject in respect of both investment services and/or financial instruments, including ancillary services.

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13
Q

COBS timing and medium of disclosure

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Client information should be provided in good time before the provision of the firm’s services.

The disclosure must be made in a durable medium, or if website conditions are satisfied, then via website.

A firm must update a client in good time about any material changes to the information provided.

A firm doesn’t need to comply with disclosure rules on each transaction for an existing client.

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14
Q

COBS client compensation info and adviser charging

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

A firm which carries on MiFID business must make available to the client who has used or intends to use those services, the info necessary for the identification of the compensation scheme. Info must be provided in a durable medium or via a website if the website conditions are satisfied.

RDR = retail distribution review
Advisor charging: 2009 FSA publish paper on RDR, took effect 2013
- improve the clarity with which firms describe their services to consumers
- address the potential detriment that adviser remuneration may effect investment outcomes
- increase the professional standards of advisers
(think SJP partners, independent, charges etc.)

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15
Q

COBS reliance on others

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

If a firm carrying on MiFID business receives an instruction to provide investment/ancillary services for a client trough another MiFID firm or authorised EEA firm subject to equivalent regulations then the firm can rely on:

  • information relayed about the client to it by the third party
  • recommendations that have been provided by the third party firm
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16
Q

COBS Rules on communicating with clients and the financial promotion rules

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Based on FTOC.

Offence under FSMA for a person to communicate a financial promotion unless:

  • the person is an authorised firm
  • the financial promotion has been approved by an authorised firm

Purpose of the rules: ensure that promotions are identified as such, and that they are fair, clear and not misleading.

FCA (FSA 2012) can ban misleading financial promotions

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17
Q

COBS exceptions to the financial promotion rules (4 examples)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Financial promotion rules are disapplied in certain cases, notably for excluded communications:

  • exempt under financial promotions order (FPO)
  • are personal quotes
  • originate outside the UK and cannot have effect within the UK
  • are subject to similar rules in another EEA state

However, exemptions for excluded communications does not generally apply in relation to MiFID business.

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18
Q

COBS rules on prospectus advertisements (4 requirements) (prospectus)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

A prospectus advertisement is any type of communication (TV, press, email, letter, text) which specifically promotes the offer to subscribe or acquire securities.

  1. states that the prospectus has been published and where an investor can obtain it
  2. clearly recognizable as an advert
  3. info in it is not inaccurate or misleading
  4. consistent with info that is in the prospectus
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19
Q

COBS communicating with retail clients (4 considerations)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A
  • firms name is included on the comms
  • info is accurate and does not emphasis potential benefits without giving fair indication of the risks
  • info is sufficient and presented that the average group of recipient is likely to understand it.
  • info does not disguise or obscure important items
20
Q

COBS Past, simulated and future performance

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Past performance

  • not most prominent feaure
  • covers at least preceding 5 years (or whole period if less)
  • shows clear warning this is past performance
  • if gross, discloses fees

Simulated past performance

  • meet same rules as past performance
  • contain prominent warning that they are simulated
  • are based on actual performance of an investment which are similar to the investment being simulated

Future performance

  • not based on (or refer to) simulated past performance
  • based on reasonable assumptions and data
  • follows same as past performance
21
Q

COBS direct offers or invitations (4 requirements)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Direct offer promotions (often in newspapers or direct mail) (include a form of response (response box)) must include:

  • info on firm and services
  • info on safekeeping of client money/investments
  • info about costs
  • info about nature and risks of any relevant designated investments
22
Q

COBS unwritten promotions and cold calling

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Rules on unwritten promotions

  • does so at appropriate time of the day
  • identifies themself and their firm at outset, makes reason for call clear
  • gets clarification of whether the client would like to continue or terminate
  • gives client a contact point

Cold calling (firms must not cold call unless):

  • have existing relationship and client would expect it
  • call relates to generally marketable packaged product (not higher volatility fund)
  • it relates to a controlled activity relating to a limited range of investments. (non-geared products)
23
Q

COBS promotions for overseas persons

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms are not permitted to communicate or approve financial promotions for overseas firms, unless the promotion sets out which firm has approved and/or communicated the promotion, and (if relevant) explains:

  • that the rules for the protection of investors will not apply
  • the extent to which UK compensation schemes will be available (or if not at all)
  • if any overseas compensation protection scheme would be applicable
24
Q

COBS Approval of financial promotions

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Approving a financial promotion is a formal process set out in the FSMA and reflected in COBS 4.1 rules, promotion must comply with all financial promotion rules.

Firms may not approve real-time financial promotions.

Authorised firms are restricted in the promotion of unregulated collective schemes.

Firm can approve promotion for which promotion rules are disapplied, but must limit to specific terms (example promotion to ECP) promotion must state its limitation.

In relation to non-MiFID business, firm is not in breach if it communicates a financial promotion that has been produced by another party if it takes reasonable steps.

  • confirm promotion complies
  • promotion is fair , clear and not misleading
25
Q

COBS Application of the Rules on Suitability

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

COBS rules on suitability requirements apply when firms:

  • make personal investment advice relating to designated investments.
  • manage investments of a retail client
  • manage the assets of an occupational pension scheme, stakeholder pension scheme, other than relation to the firm’s MiFID, equivalent third-country or optional exemption business.

For non-MiFID business, the rules only apply to:

  • retail clients
  • where the firm is managing the assets of an occupational pension scheme, stakeholder pension scheme, other than relation to the firm’s MiFID, equivalent third-country or optional exemption business.

Churning and switching come under COBS rules on suitability. Transaction may look suitable in isolation, but can be detrimental to the client.

26
Q

COBS Suitability Assessment and Report

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

The suitability rule exist to ensure that authorised firms take reasonable steps to ensure that personal recommendations (or decisions to trade) are suitable for their clients’ needs.

Firm should assess the clients:

  • knowledge and experience
  • financial situation
  • investment objectives and risk profile

FCA expects firms to:

  • consider their incentive schemes
  • review their governance, systems and controls
  • take action to address inadequacies

Suitability report

  • required if a firm makes a personal recommendation to a retail client
  • must specify client’s demands/needs, explain disadvantages and explain why firm has concluded that the recommendation is suitable for the client.

timing of report

  • life policy - before contract is concluded
  • personal pension scheme, within 14 days of contract concluding
  • any other, before transaction is concluded
27
Q

COBS Information required to make a suitability assessment

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firm should gather information on:

the service or transaction…:

  • meets their investment objective
  • carries a level of investment risk which the client can financially bear
  • carries risks that the client has the experience and knowledge to understand

clients knowledge and experience:

  • types of services/transaction and investments they are familiar with
  • nature, volume, frequency and period of their involvement in such transaction
  • level of education, profession or relevant former profession
28
Q

COBS assessing suitability for professional clients

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Can assume all professional clients have knowledge and experience in that area. Can assume per se professional clients are financially able to bear and risks, cannot assume the same for elective professional clients.

29
Q

COBS dealing with insistent clients (suitability)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

an insistent client is one where

  • firm has given personal recommendation
  • client decides differently to the firm
  • client wishes the firm to facilitate the transaction

Firm must communicate with the client

  • firm doesn’t recommend it
  • reasons why
  • risks involved
  • reasons why its not suitable
  • firm must get acknowledgement from the insistent client they understand this
30
Q

COBS the application of the rules on appropriateness (non-advised sales)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

applies to a range of MiFID (and some non-MiFID) investment services which do not involve advice or discretionary portfolio management.

The purpose of the appropriateness test is to provide a degree of protection for non-advised transactions.

Firm has obligation to to assess appropriateness (knowledge and experience) of client

  • client understands the risks
  • can assume professional client for certain products/services if in same areas/field
  • what services the client is familiar with
  • nature, volume, frequency of previous transactions
  • level of education, former profession

Obligation to warn client if think service is inappropriate

sometimes assessment is unnecessary

  • service is execution only
  • client has been informed that firm is not required to assess them (lose protection)
  • if instrument is non-complex
31
Q

COBS product disclosure KIIDs and KFDs

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

KIID = key investor information documents

UCITS must have a KIID, must be fair, clear and not misleading. KIIDs cover the terms and features of a product in a prescribed level of detail.

KFD = Key feature document
A disclosure document containing nature and risks of a designated investment.
- each packaged product
- cash deposit ISA
- cash deposit child trust fund
32
Q

COBS product disclosure: independent versus restricted advice

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms providing advice on retail investment products to retail clients need to describe these services as either independent or restricted.

Independent advice = truly independent, firm is not limited to relevant products issued by itself or close partners.

Restricted advice = doesn’t meet the standards set for independent advice, firm must disclose this to the client, must explain nature of restriction

33
Q

COBS PRIIPs and KIDs

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

PRIIPs = Packaged Retail and Insurance-based Investment Products

  • Regulation on KIDs (Key information documents) introduced on PRIIPs, CISs and other packaged products. In addition to KIID and KFD.

KID is a simple document giving key facts to investors in a clear and understandable manner. Contents is in predetermined sequence.

  • product
  • risks and return profile
  • costs
  • complaints
  • what happens if fund is unable to pay out
34
Q

COBS Cancellation and the right to withdraw

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Cancellation rights must be provided to retail customers when they transact investment business with a firm. Client must be told of cancellation right in good time before the customer is bound by the contract.

Cancellation rights and rights to withdraw are intended to ensure that clients entering into the relevant range of investment transactions have the opportunity to reconsider their decision.

Cancellation periods

  • life and pension products 30 days
  • ISAs 14 days
  • non-life and pension products (advised, non distance and distance contracts) 14 days

Record keeping

  • indefinitely for pension transfer/opt out
  • at least 5 years for life policy, personal/stakeholder pension
  • at least 3 years for any other case
35
Q

COBS Application of the Rules on Dealing and Managing

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

COBS rules on dealing and managing are:

  • Best execution
  • client order handling
  • client limit orders
  • record keeping, client orders and transactions
  • personal account dealing
  • recording telephone conversations and electronic communications

Generally apply to designated investment business of authorised firms. Certain provisions apply to non-MiFID firms as if they were rules.

36
Q

COBS Principles and Rules on Conflicts of Interest

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

The rules on conflicts of interest are contained in SYSC.

Require that firms take all reasonable steps to identify, prevent and/or manage conflicts of interests between:

  • the firm (any connected parties) and the client of the firm
  • one client of the firm and another

Firms under these obligations should:

  • operate effective organizational arrangements deigned to prevent conflicts of interest
  • have controls in place for externally facing investment research
  • if a conflict arises, disclose the interest before business (last resort, as should get rid)
  • keep records of all activities where a conflict has arisen
  • have conflict of interest policy

Type of organizations arrangement is a Chinese Wall

37
Q

COBS Conflicts of interest, Investment research and research recommendations, payments for research

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Conflict of interest = the firm dealing ahead

Has to be clearly labelled as investment research and presented as an objective or independent explanation.
Fair presentations entails:
- name of firm and analysts
- label forecasts and price targets
- summarize main assumptions/valuation
- must be deemed as reasonable by the FCA
- disclosure of interests

There are a list of measures and arrangements in place.

  • research individuals cannot undertake personal transactions until research has been out for reasonable time
  • Must have prior approval from compliance

Firms can disseminate research on behalf of another person.

Rules are different for firms producing non-independent research, must be clearly identified as such.

MiFID 2 brought in new rules around how firms consume and pay for research.

EU regulated firm which produce research must apply a separately identifiable charge to the research when providing it to an EU regulated firm.

Firms can only pay for research via
- own firm resources
- Research payment account (RPA)
RPA is a account funded by a specific charge to its clients.

38
Q

COBS Best Execution

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

COBS 11
The best execution rules under COBS require firms to execute orders on the terms which are most favorable to their client.

MiFID 2 requires firms to have an order execution policy in place which clearly articulates to clients how it seeks to obtain the best results for them. MiFID 2 is prescriptive in terms of the content of the order execution policy.

If a firm receives a specific instruction from a client, it must execute the order as instructed.

Execution factors

  • price
  • costs
  • speed
  • likelihood of execution and settlement
  • size
  • other considerations

Relative importance of each factor depends on

  • client and how they are categorized
  • the client order
  • financial instruments involved
  • execution venues to which that order can be directed
39
Q

COBS Client Order Handling (and client limit orders) (aggregation and allocation)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms must apply procedures which provide prompt, fair and expeditious execution of client orders, relative to the other orders or trading interests of the firm.

  • executed orders are recorded and allocated
  • comparable orders are executed sequentially
  • retail clients are informed of any material difficulty in prompt execution of their order
  • if firm oversees settlement, money/assets must be delivered promptly and correctly

Aggregation and Allocation
firms must only aggregate deals if:
- unlikely to disadvantage any aggregated clients
- fact that aggregation may disadvantage client has been disclosed
- an order allocation policy has been established for fair allocation (especially for partial allocations)

Client limit orders - if cannot execute immediately, must make the limit order public.

40
Q

COBS Personal Account Dealing

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms must have arrangements (compliance) in place to prevent their employees who are relevant persons from:

  • personal trades which are contrary to market abuse regulation (conflicts of interest)
  • procuring anyone else into a transaction which breaks MAR
  • improperly disclosing material non-public price sensitive information (others could act on this)

Firms must keep records of all personal transactions notified to them. Firms have procedures in place to notify them of any such personal transactions.

There are some exceptions, such as dealing in funds where there is not control over the fund.

41
Q

COBS Reporting to Clients

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms are required to ensure that clients receive adequate reports on the services they provide to them, including associated costs.

If a firm carries out an order for a client it must send a ‘notice’ confirming details.

Periodic reporting - periodic statements must be sent to the client at least quarterly, exceptions:

  • if the client receives deal-by deal confirmations, and certain higher-risk investments are excluded, the statement may be sent every 12 months.
  • if client has authorised their portfolio to be leveraged, statement must be provided monthly.

Record keeping (high level record keep requirements in SYSC sourcebook, but COBs has detailed requirements for specific activities)

  • MiFID business, at least 5 years from the date of dispatch
  • other business, at least 3 years from date of dispatch
42
Q

COBS Client Assets

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Rules relating to custody and safeguarding of client money/ assets are contained in the Client Assets Sourcebook (CASS).

Firms must make adequate arrangements to safeguard assets in the event that firm goes insolvent or uses the client assets in own firm’s account.

Within CASS, there is a requirement to segregate client money from any other money held by the firm.

CASS does not apply to:

  • UCITS - qualifying schemes
  • ICVCs
  • credit institution under the BCD in relation to deposits held in accounts with themselves
  • money due and payable to the firm
  • others
43
Q

COBS Client Assets, requirement to reconcile and reports

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Firms must keep all appropriate records and accounts necessary to enable the firm at any time and without delay to be able to distinguish all the safe custody assets held for all its clients.

CASS 6.5 sets out obligations of firms to perform internal and external reconciliations on safe custody assets.

External reconciliations carried out to ensure accuracy of internal records and accounts.
FCA handbook provides that external reconciliation should not allow more than one month to pass between each external client money reconciliation.
Internal reconciliation happens when reasonable.

Firms must inform the FCA without delay of any failure to comply with the reconciliation requirements, including reconciliation discrepancies and making good any such discrepancies. Firm must make good any shortfall for which it is responsible.

44
Q

COBS Client Assets, Enhancing the Client Money and Assets Regime (right of use, cass resolution pack, mandate)

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Right of use:
two types of arrangement under which a firm is given the right to use a client’s assets
- bare security interest where the assets belong to the clients until the firms right to realise those assets crystallizes
- ‘right to use arrangement’ whereby legal title to the assets is transferred to the firm which can then treat them as its own.

CASS Resolution pack:
to ensure that a firm maintains and is able to retrieve information as soon as practicable and in any event within 48 hours which would, in the event of insolvency, assist in the timely return of the clients assets.

Mandate:
where the firm has access to and the ability to control a client’s assets or liabilities where they are held under the instruction or control of a third person without recourse to the client themselves. Must have client consent and retain records.

45
Q

COBS CASS Audit

Unit 1 - 4. The FCA’s Conduct of Business and Client Assets Sourcebooks

A

Every firm that holds client assets is required to have an annual audit of their CASS arrangements. Auditor will report directly to the FCA on its findings,

CASS auditor needs to understand the business model including nature of services and transactions, settlement, third party administrator or custodian.

During the audit the auditor will conduct a risk assessment, having considered the firm’s own risk assessment, as to whether the firm has maintained systems adequate to comply with CASS rules.

The Supervision Manual (SUP) determines:

  • A ‘Reasonable assurance client assets report’ is completed when the firm holds client assets
  • ‘Limited assurance client asset report’ is when firm is permitted to hold client assets but claims it doesn’t, or if it doesn’t have client asset permissions.

Auditor must deliver final report to the firm within four months of the end of the period covered.

CISI Unit 1 (7 decks)

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