Transact CASS Fine 3.5m

The FSA continue to enforce the CASS rules in full regardless of customer detriment.  Transact failed to perform an internal reconciliation for 8 years and had inadequate systems and controls with a lack of experienced senior staff.  Compliance failed to pick up the breaches and relied on audit opinions which also failed to identify the breaches; no excuse for the FSA.

This highlights the need for competent staff who understand the CASS rules at a senior level.  The lack of an internal reconciliation meant Transact failed to identify their client money requirement daily and were trading on uncleared cheques with other client's money.  None of this actually caused consumer detriment but could have caused significant problems in the event of failure of the firm.

They also failed to have trust letters in place for some accounts and lacked adequate procedures to make sure these were in place on time.  Just writing down the process makes a significant difference to the FSA and should help ensure the firm stays compliant and free of enforcement action.

To avoid these problems makes sure you do the following:

  • Trust letters in place
  • Procedures fully documented
  • Compliance trained to identify CASS breaches
  • Do not rely on audit reports alone
  • Senior management must be trained in the CASS requirements
  • Always complete a compliance internal reconciliation
  • Make sure the internal rec identifies uncleared cheques and in the resource requirement daily
Published: December 2011
By: Anthony Smith

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