Capability - Client Assets

Client Assets and CASS Compliance: Expert Advisory for FCA-Regulated Firms

The FCA’s Client Assets Sourcebook (CASS) outlines rules that are designed to protect client money, custody assets and relevant funds, so they can be returned to clients if a firm fails. Getting CASS wrong has serious consequences - restrictions on permitted activities, regulatory enforcement, operational restrictions, costly audits and the potential for significant customer harm.

Square 4 provides specialist CASS advisory and assurance services for FCA-regulated firms. Our team has deep experience across all chapters of CASS and has supported all types of firm with CASS compliance. We deliver CASS compliance reviews, process and controls design, support for firms subject to FCA Supervision, s166 skilled person review support, governance advisory and support with third-party oversight - all focused on building CASS frameworks that work in practice and stand up to regulatory and audit scrutiny. Whether you are establishing CASS arrangements for the first time, strengthening existing controls, preparing for CASS audit, or responding to FCA findings, our solutions-focused approach balances regulatory requirements with commercial and operational realities.

Why CASS Compliance Matters

CASS compliance is a priority area for the FCA given its consumer protection objective. When something goes wrong with client money or assets, the impact on customers can be severe – particularly in an insolvency scenario where poor CASS controls can mean that clients lose money or assets.

The FCA expects firms to maintain strong arrangements for segregating, reconciling and protecting client money,custody assets and relevant funds. The regulator also takes an assertive approach to CASS Supervision, frequently using VREQs in cases where they suspect firms are falling short. This can have an immediate and significant impact on a business.

CASS is a unique area in that most firms subject to CASS rules will be subject to an annual CASS audit with the resulting report being provided to the FCA. The FCA routinely follow up with firms to understand what they’re doing to remediate the breaches reported. If they FCA don’t get the assurance they’re hoping for through this contact, it can drive more formal supervisory work.

Under SM&CR, the CASS oversight function is a prescribed responsibility with individual holders being personally accountable. The individual holding this responsibility must ensure the firm’s client asset arrangements meet FCA requirements – and they are personally accountable if controls fail.

Our CASS Services

CASS Compliance Reviews
We independently review the effectiveness of your CASS systems and controls, whether it’s an end-to-end review of CASS arrangements or a more targeted review and testing of a specific process. Our reviews can cover CASS requirements for all types of business and will assess how well CASS systems and controls comply with regulatory requirements, expectation and industry standards. We present the results of our reviews in a format that meets your need, whether it’s a gap analysis that can the basis of a remediation programme, or a report of findings and recommendations. We provide expert support to internal compliance monitoring teams, to help ensure that they are equipped to provide appropriate second line challenge to operational teams and we test CASS Resolution Packs to assess how easily accessible and understandable they are to someone not familiar with the pack.
Audit support and breach remediation
Breaches happen and it’s always better for a firm to identify breaches itself than for them to be found for the first time by auditors. We set up core processes, controls and communications around breach identification and reporting, materiality assessments, communication with the regulator and breach remediation. We support firms to prepare for CASS audit, supporting them to communicate CASS arrangements in a way that the auditor will understand, maximising efficiency of the audit process. We support firms in providing constructive challenge to auditors, if appropriate and we help to prepare management responses to audit reports, which will give the FCA valuable insight into the firm’s approach to CASS compliance.
CASS Governance Advisory
We advise on CASS governance structures, supporting the individuals holding the CASS oversight function as well as helping the governing body to understand the firm’s CASS risks and how they’re managed. Services include governance framework design for CASS oversight, CASS committee advisory and support, management information design and review, board and committee reporting on client assets, and SM&CR accountability mapping for CASS responsibilities. Our goal is to ensure your governance arrangements give the board and CASS oversight officer confidence that client assets are properly protected.
CASS Process and Controls Design
We design CASS-compliant operational processes and controls, whether you are applying for CASS permissions for the first time or revising existing arrangements. Our processes are designed to meet FCA expectations and stand up to external audit scrutiny.
CASS s166 Skilled Person Review Support
Our team has experience delivering CASS-focused s166 reviews as skilled persons as well as providing firm-side support for those going through s166. We understand the depth of analysis regulators expect and we help firms prepare for, manage and respond to s166 reviews on client assets. This includes pre-review readiness assessments, evidence compilation and documentation, support during the review process, response to draft findings, and remediation planning.
Third-Party Oversight
Third party custodians can be an important part of many custody models but using them can provide challenges to firms. We work with firms to clearly define the custody models being used, ensuring clarity around roles and responsibilities. We carry out due diligence on third parties and review custody agreements and acknowledgement letters for CASS compliance.
Outsourcing Oversight
Where third parties are involved in running CASS processes, it is essential to ensure the basis for the involvement is clear and understood by all parties. We review outsourcing contracts for CASS compliance as well as developing outsourcing policies and registers and designing due diligence and oversight controls to ensure CASS services are compliant on an ongoing basis.

Sectors We Support – Our CASS expertise spans:

Stockbroking, Wealth Management & Investment Platforms – client money, custody assets, nominee arrangements, platform architecture, mandates, CASS Resolution Packs, selection and appointment of third parties, acknowledgement letters CMAR and audit support
Payment Services & E-Money – relevant funds, safeguarding arrangements, segregation, insurance or comparable guarantee, segregation of secure, liquid assets, reconciliation, selection and appointment of third parties, acknowledgement letters, safeguarding returns and audit support
Insurance & Insurance Distribution – client money held in insurance distribution, statutory and non-statutory trust arrangements and operation of client money accounts
Wholesale Markets & Trading – margin, collateral management, title transfer collateral arrangements, multi-entity custody chains
Debt management – identification of client money, bank selection, acknowledement letters, operation of client money accounts, payments to creditors, record keeping and reconciliations
Claims management – identification of client money, bank selection, acknowledement letters, operation of client money accounts, money payable to the firm and to third parties, record keeping and reconciliations

Why Square 4

Specialist CASS Expertise

CASS is a specialist area requiring deep technical knowledge. Our team includes dedicated CASS practitioners with extensive experience across compliance reviews, process design, s166 reviews and governance advisory.

Solutions-Focused Approach

We balance CASS requirements with commercial and operational realities. Our processes are designed to work in practice, not just satisfy a compliance checklist. We focus on building your team’s capability so they can own and run CASS processes themselves, spotting issues quickly when something goes wrong.

End-to-End Support

From initial process design, through to compliance review governance advisory, audit preparation, s166 support, returning assets to clients and removing CASS permission,we cover the full CASS lifecycle. Our flexible engagement models include project-based reviews, secondment resource and retained advisory support.

Frequently Asked Questions

What is CASS and why does it matter?

CASS is the Client Assets Sourcebook, part of the FCA’s Handbook. It sets out the rules firms must follow when they hold or control client money or custody assets. The purpose is to protect client money and assets so they can be returned to clients if a firm fails. CASS matters because failures in client asset protection can cause significant customer harm, particularly in an insolvency scenario where poor CASS controls can mean that the client loses money or assets. CASS is a unique area in that most firms subject to CASS rules will be subject to an annual CASS audit with the resulting report being provided to the FCA. The FCA routinely follow up with firms to understand what they’re doing to remediate the breaches reported. If they FCA don’t get the assurance they’re hoping for through this contact, it can drive more formal supervisory work. The FCA treats CASS as a priority area and non-compliance can result in enforcement action or restrictions on regulated activities or operations.. Square 4 provides specialist CASS advisory to help firms build and maintain compliant arrangements.

What is the difference between CASS 6 and CASS 7?

CASS 7 covers client money – the rules for firms that hold money belonging to clients in connection with investment business. Requirements include segregation of money in client bank accounts, daily reconciliations and detailed record-keeping. CASS 6 covers custody assets – the rules for firms that hold financial instruments (shares, bonds, funds) on behalf of clients. Requirements cover the registration of assets, segregation from the firm’s own assets and due diligence on third-party custodians. Many firms are subject to both CASS 6 and CASS 7, and controls must address both regimes. Square 4 advises across all CASS chapters.

What is CASS 15 and who does it affect?

CASS 15 applies to payment services and e-money firms and came into force on 7 May 2026. CASS 15 covers segregation of either relevant funds or secure, liquid assets, the use of insurance or comparable guarantee to safeguard relevant funds, reconciliations, record-keeping and reporting obligations. Square 4 advises across all CASS chapters.

What does a CASS compliance review involve?

A CASS compliance review assesses the effectiveness of your CASS systems and controls, considering regulatory requirements, expectations and industry standards. . It can cover the full suite of applicable CASS rules, or focus on review of a specific area of CASS compliance. We present the results of our reviews in a format that meets your need, whether it’s a gap analysis that can the basis of a remediation programme, or a report of findings and recommendations. We provide expert support to internal compliance monitoring teams, to help ensure that they are equipped to provide appropriate second line challenge to operational teams and we test CASS Resolution Packs to assess how easily accessible and understandable they are to someone not familiar with the pack.