The way firms handle client money in the UK is undergoing a notable shift with the introduction of CASS 15, a new framework from the Financial Conduct Authority that reflects the growing use of payment firms and e money institutions. For accountancy practices and their clients, particularly those using digital platforms or third party providers to move or hold funds, these changes are worth understanding.
What CASS 15 aims to address
CASS 15 has been developed to bring greater clarity and consistency to how client funds are safeguarded outside the traditional banking and investment sectors.
Historically, the FCA’s Client Assets Sourcebook focused heavily on investment firms. However, with the rapid growth of fintech platforms and payment service providers, there has been a need to extend similar protections to a broader range of firms that handle client money in different ways.
The new rules are designed to ensure that client funds are properly segregated, recorded, and protected in the event of a firm failure. This is particularly relevant where funds are held by payment institutions or e money providers rather than deposit taking banks.
Key changes for firms
One of the main changes under CASS 15 is a clearer distinction between safeguarding and traditional client money rules. Firms must now demonstrate how client funds are identified, separated from their own money, and protected at all times. This includes maintaining accurate records and performing regular reconciliations.
There is also a stronger emphasis on governance and oversight. Senior management are expected to take greater responsibility for ensuring that safeguarding arrangements are robust and that risks are effectively managed. This aligns with the wider regulatory focus on accountability and internal controls.
Another practical change is the requirement for more detailed documentation. Firms need to clearly set out their safeguarding approach, including how funds flow through their systems and how they would be returned to clients if the firm were to cease trading.
Implications for accountancy firms
For accountancy practices, the direct impact of CASS 15 will depend on whether they hold or control client funds, or whether they advise clients who use third party providers. Even where firms are not directly regulated under these rules, there is an increasing expectation that advisers understand how client money is protected.
Clients may assume that all funds held with financial service providers benefit from the same level of protection as bank deposits. In reality, safeguarding arrangements can differ significantly. This creates an opportunity for accountants to add value by helping clients understand the risks and the protections in place.
Practical steps to consider
Firms should review whether any services they offer involve handling client money, directly or indirectly. Where third party platforms are used, it is sensible to understand how those providers comply with safeguarding requirements.
Clear communication with clients is also important. Explaining how funds are held, and what protections apply, can help manage expectations and build trust.
Looking ahead
CASS 15 represents a continuation of the FCA’s effort to modernise the regulatory framework in line with changes in how financial services are delivered. For accountants, it reinforces the importance of staying informed about developments that affect client assets, even where the rules do not apply directly.
As digital finance continues to evolve, the handling of client funds will remain a key area of focus, both for regulators and for the firms that support their clients in navigating these changes.
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