Written by Will Watling on Wednesday 10 December 2014
I’m sure the parents amongst the readers of this blog have all heard the above phrase from time to time, often accompanied by finger pointing at a sibling. I was therefore surprised to read the FCA not only encouraging platforms and other administration firms to point the finger if a third party hinders them from meeting the new CASS obligation starting on 1st June 2015, but making it a requirement to report the third party to the FCA!
Whilst PS 14/9 might not be the most scintillating bedtime read, I admit that 5.83 and 6.5 intrigued me. Having discussed it with my colleagues and some large TAs, it does indeed appear that the regulator wants to make it clear that using the “s’not my fault” excuse will no longer be tolerated.
5.83 introduces the concept of the ‘responsible third party’ causing the break that needs to be rectified. Even if a platform can show clearly they’re not at fault, they still have a responsibility and all the associated costs involved of rectifying the break and financially covering the short position until the rectification has been closed out. Under the new 1st June CASS rules, the time to do this is also reducing from 25 working days to ‘monthly’, so rectifying breaks is becoming a hot topic for many providers.
Once rectified, the provider can try to claim compensation for the costs incurred on behalf of the third party. However, without a good audit trail and MI, this may be tricky. I suspect many platforms will grin and bear this as part of BAU. However, if the third party continues to cause delays, perhaps because its systems aren’t able to provide data electronically in a timely manner, then under 6.5, the administrator should report them to the FCA, the implication being that the issue will be systemic and needs to be rectified so other administrators aren’t also affected. In today’s cost conscious environment, many providers will invoke action for recompense.
So, if you’re a TA or fund manager responsible for providing data to distributors, it might be worth looking now at how efficient your data services are. Likewise, if you’re a distributor responsible for doing the ‘recs’, are you sure your systems are ready for 1st June?
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