With the CASS Policy Statement now published the industry is turning its attention to the practicalities of implementation. Alongside our note on FCA’s decisions as set out in the PS, we are providing support to firms that are starting to plan their implementation programme. The phasing of the introduction of the CASS measures provides a useful basis for the planning timeframe, but, as FCA makes clear, aspects such as re-papering clients and banks are, in many cases, major projects in their own right and will need to start early in order to be concluded comfortably before the regulatory deadlines.

Immediately before the FCA took over from its predecessor, City surveys showed considerable concern in the industry that the new regulator was not committed to consultation, but that European regulators were. That was a surprise. There is some likelihood that the comments were coloured by a degree of fear of the unknown or even represented a tactical response to apply pressure to FCA to demonstrate its commitment. Now, 15 months into FCA’s life, we have another PS by which to assess FCA’s position. As with all regulatory consultations, in PS 14/9 FCA has stuck to its intentions pretty rigidly, but not right across the board. Notable here is its decision to defer all work on the strategic redesign of the client money distribution regime, pending the government’s review of the SAR. Likewise it has deferred sine die its plans for an annual statement to clients on the protection provided to their assets. These are clear responses to consultation. Furthermore, the regulator has significantly qualified its requirements for separate registration of customers’ v firms’ assets. The result is a significant dilution of the intention. Another example of material restructuring of proposals is the shrinkage of the multiple pools plan, which now fills just a small of corner of its original canvas. And then there is the important modification of the proposed closure of the DvP window – another substantial concession to industry concerns. Other examples abound.

But, for all of that, the FCA is still no push-over. Where concerns and objections have taken a generic form, lacking any specific examples, FCA has rejected the representations. They were unpersuaded by the objections to their plan to remove the concession relating to bank acknowledgement letters for accounts at overseas banks. Here, as in other places, they have pointed out that they have not received specific examples of the problems cited. They are not going to be blagged out of their plans, it seems. Our note on a selection of the changes is attached.

Whether firms find these measures reasonable will depend on many factors of which cost will of course be the most persuasive. Certainly it is hard to complain that FCA simply does not listen. Either way, there is work to be done. As ever, we advocate extensive involvement of those in the firm who will be most affected, we strongly recommend thorough training and updating at all levels, especially senior management and Board, and we support early adoption to provide time for new procedures to bed in before the firm is dependent on them.

Firms wishing to discuss plans should contact Oliver Lodge on 020.7389.7028 or Oliver.Lodge@owlrc.co.uk

June 2014