Client Asset Sourcebook (CASS)

2. Client Asset Sourcebook (CASS)
The rules contained in CASS govern the way in which Paragon holds client money, in order to adequately protect clients in the case of business failure. As Paragon does not hold investment permissions it cannot and does not hold client assets.
Client money is money of any currency amount which, while carrying on insurance distribution activity, Paragon holds on behalf of a client or which Paragon treats as client money in accordance with the client money rules set out by the FCA. It can include premiums, claims money and premium refunds – as well as professional fees due from clients, for example, for onward payment to a loss adjuster.
As Paragon only carries on insurance distribution activities, it is only required to comply with the insurance distribution provisions of CASS 5 and certain general provisions set out in CASS 1.
• Handling Client Money
• Holding client money as an agent

• Segregating client money in a statutory or non-statutory trust account
Paragon controls and handles client money and keeps the client money in a Non-Statutory Trust (NST) account as set out in CASS 5.4.

Paragon has appointed Jon Burstin as its Client Money Manager; Jon is responsible for overseeing Paragon’s day to day compliance with the systems and controls

• Co-mingling insurer monies and client money
Paragon co-mingles money held as agent of an insurer with client money held in its non-statutory trust client bank account, Paragon always ensures it has the insurer’s agreement in writing to do so. Paragon also ensures that said insurers agree to subordinate the interests of the insurer to the interests of Paragon’s other clients. Co-mingled monies are subject to the FCA’s CASS requirements set out in Chapters 5.3 to 5.6.

• Client bank accounts
Paragon understand it owes a duty of care to its clients when it decides which bank(s) to use. Paragon places client money with an approved bank.

The SCC is responsible for assessing whether the bank chosen is appropriate to hold client money, the committee considers the following:

• the capital of the bank;
• the amount of client money placed, as a proportion of the bank’s capital and deposits;
• the credit rating of the bank (if available); and
• if the information is available, the level of risk in the investment and loan activities of the bank and its affiliates.

• Information to be provided to the customer
• Holding client money:
o Segregating client money
o Passing money to a third party
o Discharging your fiduciary duty
o Withdrawing commission and fees
o Controlling client money
• Client Money Calculation:
o Using the accruals method
o Using the client money balance method
o Notifying and reporting to the FCA
Paragon will notify the FCA immediately if it is unable to, or does not, perform the client money calculation. Paragon will also notify the FCA immediately if it cannot make good a shortfall in the client money account(s) by close of business on the day the calculation is done.

• Appointed Representatives (ARs):
Paragon does not currently have any AR’s. Should Paragon appoint an AR the applicable provisions will be updated in this manual.
o Risk transfer
o Segregating client money
o Monitoring ARs
• Client Money Audit

The Firm is responsible for ensuring an annual audit of client money is completed.

o What must be covered in a client money audit?
The client money audit report principally covers the systems and controls a firm operates to handle client money. It is not an audit of the actual client money account(s).

The auditor must submit his report to the firm giving his opinion on whether:

• the firm has maintained systems adequate to enable it to comply with Chapter 5 of the CASS Sourcebook (except CASS 5 .2 which relates to holding money as agent); and
• the firm has been compliant with the rules in Chapter 5 of the CASS Sourcebook (except CASS 5.2) throughout the year and at the date of the report.

• Record Keeping

Once the report has been received, there is no requirement to send the report to the FCA. However, the FCA does have the right to request the last audit at any time.

• Credit Write Backs