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CASS 8 – Client Asset Mandates

PostedJune 23, 2025
UpdatedJune 23, 2025
ByAndy

1. Chapter Summary

CASS 8 governs the rules and requirements around mandates given by clients to firms regarding the management and use of client assets. It ensures that firms only act on client assets when properly authorised through clear and valid mandates, providing legal certainty and protection to clients. The chapter is essential in maintaining trust and safeguarding client assets by clarifying the scope and limits of client consent.

2. Applicability

This chapter applies to all FCA-regulated firms that hold or control client assets and rely on client mandates to use or deal with those assets. It mainly concerns investment firms, custodians, and other firms undertaking activities involving client asset management. The rules are generally relevant to both retail and professional clients.

3. Key Rules and Their Meaning

  • CASS 8.1.1R – Validity of client asset mandates Firms must only act on client assets if they hold a valid and enforceable client mandate, which is a written or electronic instruction authorising the use or disposal of client assets. In practice: Firms must verify and keep evidence of client authorisation before using client assets.
  • CASS 8.2.1R – Content of mandates Mandates must be clear and specify the permitted actions regarding client assets, including any limits or conditions. Meaning: This prevents misuse or overreach beyond what the client agreed to.
  • CASS 8.3.1R – Documentation and retention Firms must retain copies of mandates and any related communications for a specified period to demonstrate compliance. Nuance: This supports FCA supervision and potential dispute resolution.
  • CASS 8.4.1R – Revocation or variation of mandates Firms must have procedures to promptly process client requests to revoke or change mandates and ensure they stop acting once mandates are revoked. Meaning: This respects client rights and prevents unauthorized use of assets.

4. Interpretation Notes / FCA Expectations

  • The FCA expects firms to have clear, documented client mandate procedures that outline how mandates are obtained, verified, and maintained.
  • Firms should ensure mandates are explicit, unambiguous, and comply with applicable contract laws.
  • The regulator highlights the importance of client consent and expects firms to promptly act on any revocation or amendment of mandates.

5. Practical Considerations for Firms

  • Implement robust onboarding processes to obtain, verify, and document client mandates clearly and securely.
  • Maintain a central repository of mandates and related correspondence for audit and compliance purposes.
  • Train staff to understand the limits of client mandates and how to handle variations or revocations.
  • Establish clear internal controls to ensure no client asset use occurs without an appropriate mandate.

6. Related Handbook References

  • CASS 7 – Client asset record keeping and reconciliation
  • CASS 3 – Custody and control of client assets (general safeguarding)
  • COBS – Conduct of Business sourcebook (client authorisation standards)
  • PRIN 2A – FCA Principles for Business (integrity, skill, care and diligence)

7. Regulatory Focus / Enforcement Risk

  • FCA enforcement focuses on firms acting without valid client mandates, which can lead to misappropriation or unauthorized use of assets.
  • Firms must demonstrate strong controls over mandates to avoid regulatory breaches and client disputes.
  • Mismanagement of mandates is a common trigger for FCA investigations in client asset cases.