13.22 basic bank account (individual assignment)

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A basic bank account that covers your minimal financial needs

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Right for you if you:

• Can benefit from up to 12 debit transactions per month included in this account
• Use for everyday banking such as purchases, ABM transactions and payroll deposits

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• Are interested in only opening a savings account that earns interest

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Interac e-Transfer is a registered trade-mark of Interac Corp. Used under license.

CreditView is a service provided by TransUnion. The Bank of Nova Scotia and its affiliates are not responsible for the service.

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The Ultimate Package monthly account fee is waived if a minimum daily closing balance of $6,000 is maintained for the entire month in the Ultimate Package. If the monthly balance of the Ultimate Package account is less than the daily minimum of $6,000 but has a combined minimum daily closing balance of $30,000 across the Ultimate Package account and Momentum PLUS Savings Account(s) for the entire month, the monthly account fee of the Ultimate Package account will be charged then rebated within the first 10 business days of the following month. The account must have sufficient funds to cover any fees, including the monthly fee. The account balance of one (1) Ultimate Package Account plus more than one (1) Momentum PLUS Savings Account(s) qualifies to pay no monthly fees on one (1) Ultimate Package account. Account holders of the Ultimate Package who are also account holders of the Momentum PLUS Savings Account(s) qualify.

Additional fees apply for shared ABM services, cross-border debit transactions and other banking services not included in the chequing account package. Fees may initially be charged for Interac e-Transfer transactions in excess of 99 in a month but will be reversed in the subsequent month. For accounts that do not provide unlimited debit transactions, a charge for additional debit transactions may apply if you perform an Interac e-Transfer transaction over and above the number of debit transactions allowed in the account. 

Ultimate Package Account holders who add Overdraft Protection to their account will have the Overdraft Protection fee(s) automatically waived. Interest will remain to be payable on overdrawn balances calculated daily at 21% (per annum) and charged monthly. The account must have a positive balance at least once every 30 days. A $5.00 handling fee will be charged for each item that is paid while the account is overdrawn more than the authorized limit. Subject to approval.

If you open an Ultimate Package account (the “Account”), on or after the date you open the Account (“Account Open Date”) you will receive an annual fee waiver (“Annual Fee Waiver”), each year for as long as you have one eligible Scotiabank Credit Card account (an “Eligible Card”) and the Account. You will receive the Annual Fee Waiver, even if you opened an Eligible Card prior to the Account Open Date. Eligible Cards are the Scotiabank Gold American Express, Scotiabank Passport ™ Visa Infinite * , Scotia Momentum ® Visa Infinite and Scotiabank Value ® Visa * credit cards. Eligible Cards are subject to change. Each Account will only receive one Annual Fee Waiver regardless of the number of accountholders on the Account or Eligible Cards opened. The Annual Fee Waiver will be applied to the first annual fee for a primary Card charged on an Eligible Card after the Account Open Date. If there is more than one Eligible Card after the Account Open Date, the Annual Fee Waiver will be applied only to the first annual fee for a primary card that is charged on an Eligible Card after the Account Open Date. All other fees and charges applicable to the Eligible Card continue to apply. Annual Fee Waiver will not be applied if your Account or Eligible Card is not open or is not in good standing and cannot be combined with any other annual fee waiver offer. Current annual fees, rates and other features for Eligible Cards are subject to change.

The Ultimate Package account includes non-Scotiabank Interac ⁺ ABM cash withdrawals in Canada and cash withdrawals at non-Scotiabank Visa * or PLUS * ABMs within and outside of Canada. Account holders may still be charged a convenience fee by the other bank and ABM operator, not by Scotiabank.

Ultimate Package account holders will receive a boost to the Regular Interest Rate (the “Ultimate Interest Rate Boost”). Refer to the Current Rates Page on Scotiabank.com for the Total Annual Interest Rate applicable to the Ultimate Package (current Regular Interest Rate plus Ultimate Interest Rate Boost), which is subject to change at any time without advance notice. It will take up to 10 business days after activating an Ultimate Package account for the Ultimate Interest Rate Boost to apply. The Ultimate Interest Rate Boost will cease to apply effective as of the date that the Ultimate Package account is closed. The Ultimate Interest Rate Boost is an annual rate calculated daily on the Momentum PLUS Savings Account(s) closing balance and paid monthly.

Ultimate Package holders will receive Ultimate Package GIC interest rates (“Ultimate Package GIC Rates”) on Long Term Non-Redeemable GICs with terms between 1 and 10 years, excluding Special Rate GICs, Market Linked GICs and Guaranteed Income Optimizer GICs. The Ultimate Package GIC Rates are subject to change without notice. For the latest Ultimate Package GIC Rates, contact your branch or call 1-800-4-SCOTIA.

Interest is accrued daily on your GIC from the issue date up to, but not including, the maturity date. For Scotiabank GICs that pay interest during their term (monthly, semi-annually or annually) the last interest payment is paid at maturity.

Account holders who have a Scotia iTRADE account (except for corporate and non-personal Scotia iTRADE accounts) qualify to be credited with the commissions associated with their first 10 online commissionable trades of equities, options, debentures ($24.99 per debenture trade) or ETFs (“Eligible Securities”) placed across all account holder(s)’ Scotia iTRADE accounts within the calendar year when they open the Ultimate Package account. In the second calendar year and thereafter, account holders qualify to be credited with the commissions associated with their first 5 online commissionable trades of Eligible Securities placed across all their Scotia iTRADE accounts during each year. Both the Ultimate Package account and Scotia iTRADE accounts must be in good standing on the last day of every month. Credits will be applied to the account holder’s non-registered Scotia iTRADE account, and, in its absence, to the account holder’s registered Scotia iTRADE account in CAD currency (converted from USD to CAD for trades executed in USD, using the applicable foreign exchange rate) within the first 10 business days of the month following the trades. To be eligible, the primary or joint account holder of the Ultimate Package account can be either the primary or joint account holder of the Scotia iTRADE account. Credits will appear as $4.99 or $9.99 per trade depending on the account trading activity: standard commissions are $9.99, if more than 150 trades are placed per quarter commissions are valued at $4.99 per trade, debenture commissions are valued at $24.99 per trade. Trades executed by a Trading Authority in the Scotia iTRADE account are also eligible. To qualify you must not be in a disallowed debit position in your Scotia iTRADE accounts and not have any outstanding margin calls due in your Scotia iTRADE accounts. No cash redemption value. Free trades are limited to one per client. Only one account holder per each joint Ultimate Package account will be entitled to receive the credits for 10 or 5 free trades, as applicable, into their Scotia iTRADE account.

The Ultimate Package qualifies for unlimited Canadian and U.S. dollar drafts. Account must be in good standing.

If you open a Preferred Package account (the “Account”), on or after the date you open the Account (the “Account Open Date”), you will receive an annual fee waiver for the first year only (the “First Year Annual Fee Waiver”) on one eligible Scotiabank Credit Card account (an “Eligible Card”) opened on or after the Account Open Date. Eligible Cards are the Scotiabank Gold American Express, Scotiabank Passport ™ Visa Infinite * , Scotia Momentum ® Visa Infinite and Scotiabank Value ® Visa * credit cards. Eligible Cards are subject to change. Each Account can only receive one First Year Annual Fee Waiver regardless of the number of accountholders on the Account or Eligible Cards opened. The First Year Annual Fee Waiver will be applied to the first annual fee for a primary card charged on an Eligible Card after the Account Open Date. If there is more than one Eligible Card opened after the Account Open Date, the First Year Annual Fee Waiver will be applied only to the first annual fee for a primary card that is charged on an Eligible Card after the Account Open Date. This First Year Annual Fee Waiver is only available for new Eligible Cards opened on or after the Account Open Date. Current or previous cardholders of an Eligible Card or cardholders that transfer to an Eligible Card on or after the Account Open Date will not receive the First Year Annual Fee Waiver. All other fees and charges applicable to the Eligible Card continue to apply. First Year Annual Fee Waiver will not be applied if the Account or Eligible Card is not open or is not in good standing and cannot be combined with any other annual fee waiver offer. Current annual fees, rates and other features for Eligible Cards are subject to change.

The Preferred Package account includes 1 free non-Scotiabank Interac ⁺ ABM cash withdrawal within Canada per month. Access fee for each subsequent cash withdrawal at non-Scotiabank Interac ⁺ ABMs will be charged $2.00 per withdrawal. Each cash withdrawal from non-Scotiabank Visa * or PLUS * ABMs will be charged $3.00 in Canada and the U.S. and $5.00 outside of Canada and the U.S. Account holders may still be charged a convenience fee by the other bank and ABM operator, not by Scotiabank.

Preferred Package account holders will receive a boost to the Regular Interest Rate (the “Preferred Interest Rate Boost”). Refer to the Current Rates Page on Scotiabank.com for the Total Annual Interest Rate applicable to the Preferred Package (current Regular Interest Rate plus Preferred Interest Rate Boost), which is subject to change at any time without advance notice. It will take up to 10 business days after activating a Preferred Package account for the Preferred Interest Rate Boost to apply. The Preferred Interest Rate Boost will cease to apply effective as of the date that the Preferred Package account is closed. The Preferred Interest Rate Boost is an annual rate calculated daily on the Momentum PLUS  Savings Account(s) closing balance and paid monthly.

Preferred Package account holders will receive Preferred Package GIC interest rates (“Preferred Package GIC Rates”) on Long Term Non-Redeemable GICs with terms between 1 and 10 years, excluding Special Rate GICs, Market Linked GICs and Guaranteed Income Optimizer GICs. The Preferred Package GIC Rates are subject to change without notice. For the latest Preferred Package GIC Rates, contact your branch or call 1-800-4-SCOTIA. Interest is accrued daily on your GIC from the issue date up to, but not including, the maturity date. For Scotiabank GICs that pay interest during their term (monthly, semi-annually or annually) the last interest payment is paid at maturity.

The primary account holder of the Ultimate Package qualifies for a monthly account fee waiver on a Basic Plus Bank Account. The primary account holder on the Ultimate Package account can be either the primary or joint account holder on the Basic Plus Bank Account. If the primary account holder of the Ultimate Package had a Basic Plus Bank Account prior to opening a new Ultimate Package the fee waiver will apply to the bill cycle following the activation of the Ultimate Package. Limit of one (1) Basic Plus Bank Account per Ultimate Package account. Both accounts must be in good standing.

Subject to availability. Upon activation, the primary account holder of the Ultimate Package account who gets a safety deposit box will receive a $60.00 fee waiver (value of a small safety deposit box) applied annually as long as the account is in good standing. Limit of one (1) annual waiver per Ultimate Package account.

Package recommendations are provided for information purposes only and should not be relied upon as financial, investment or other advice. All recommendations are based on the information you provide and Scotiabank’s current product and service offerings. Terms and conditions apply to all packages and benefits displayed and should be reviewed carefully. All rates, fees, features, reward programs, bonus offers and benefits and related terms and conditions are subject to change. Please visit your nearest branch or call [1-800-472-6842] to speak with a Scotiabank representative.

The primary account holder of the Ultimate Package qualifies for a monthly account fee waiver on a Scotia ® U.S. Dollar Daily Interest Account. The primary account holder on the Ultimate Package account can be either the primary or joint account holder on the Scotia ® U.S. Dollar Daily Interest Account. If the primary account holder of the Ultimate Package had a Scotia ® U.S. Dollar Daily Interest Account prior to activating an Ultimate Package the fee waiver will apply to the bill cycle following the activation of the Ultimate Package. Both accounts must be in good standing. Limit of one (1) Scotia ® U.S. Dollar Daily Interest Account per Ultimate Package account.

The account qualifies for one (1) book of 100 personalized cheques per year per account. Account must be in good standing.

To qualify for the 1-Year No Monthly Account Fee Offer (the “Offer”) is available to eligible clients who open a new Preferred Package account under the StartRight TM Program (the “Account”). During the first 12 months, your monthly Account fee will be waived and will not appear as a charge on your Account. The Account must be open and in good standing at the time of the waiver. All applicable service charges on the Account will continue to be applied monthly. After the first 12 months, you will begin to see the monthly Account fee charged to your Account unless you maintain a minimum daily closing balance of $4,000, in which case the monthly Account fee will be waived per the Account terms and conditions. Employees of The Bank of Nova Scotia (“Scotiabank”) and individuals who are currently or were previously holders/ joint holders of a Scotiabank chequing account within the last 2 years are not eligible for this Offer.  This Offer is non-transferable and cannot be combined with any other offers. Maximum one Offer per customer. All rates, fees, features and benefits are subject to change. Offer may be changed, cancelled, or extended at any time without notice.

The primary account holder of the Preferred Package qualifies for a monthly account fee waiver on a Scotia ® U.S. Dollar Daily Interest Account. The primary account holder on the Preferred Package account can be either the primary or joint account holder on the Scotia ® U.S. Dollar Daily Interest Account to qualify. If the primary account holder of the Preferred Package had a Scotia ® U.S. Dollar Daily Interest Account prior to activating a Preferred Package the fee waiver will apply to the bill cycle following the activation of the Preferred Package. Limit of one (1) Scotia ® U.S. Dollar Daily Interest Account per Preferred Package account. Both accounts must be in good standing.

Subject to approval. A customer must apply for an Overdraft Protection Plan to determine if they qualify.

U.S. Government Accountability Office

More than 7 Million U.S. Households Have No Bank Account. Why?

Access to basic banking services, such as checking accounts, is something many of us may take for granted. Having this access can help boost an individual’s financial well-being. However, more than 7 million U.S. households did not have a bank account in 2019.

To kick off Financial Literacy Month, today’s WatchBlog post looks at who is less likely to have a bank account, why that may be the case, and what is being done to help these households open a bank account.

Who is less likely to have a bank account?

Historically, who has a bank account has varied by income, education, and race. These differences continue today, although households without a bank account are at their lowest level in 30 years. In our March report, we found that lower-income, less-educated, and minority households are less likely to have a bank account. For example, Black and Hispanic households are about 60% less likely than White households to have a bank account.

Households without a bank account are also more likely to use costlier, alternative financial services, such as check cashing and payday loans.

Why might someone not have a back account?

Consumers cited several reasons why they did not have a bank account. Among the top 3 reasons, consumers said that not having enough money, high or unpredictable fees, and distrust of banks were reasons they didn’t have accounts. Other reasons cited by consumers included privacy concerns, not qualifying for an account, banks not offering the needed services, and the inconvenience of bank hours and locations.

How is the federal government helping more consumers open bank accounts?

Federal financial regulators have taken a wide range of actions to help households without bank accounts gain this access to basic banking services. These have included initiatives to provide:

• Toolkits, checklists , and public awareness campaigns to help consumers understand and choose financial products, including the process of opening a checking account.
• Financial literacy programs, such as Federal Deposit Insurance Corporation’s Money Smart , to help consumers understand the importance of having a bank account and how to pick a bank account .
• Information on practices that banks can use in offering basic banking services to those who do not have bank accounts or who regularly use alternative financial services.

However, in our review of these efforts, we found that several federal financial regulators did not have performance measures that assessed the results of their efforts to make sure people can access basic banking services. As a result, we recommended that they develop performance measures that can help determine the effectiveness of these efforts.

• Comments on GAO’s WatchBlog? Contact [email protected] .

GAO Contacts

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• FCA Handbook
• CASS 7.13 Segregation of client money
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View options, more resources:, cass 7.13 1 segregation of client money, application and purpose.

1 The segregation of client money from a firm's own money is an important safeguard for its protection.

Where a firm establishes one or more sub-pools , the provisions of CASS 7.13 (Segregation of client money) shall be read as applying separately to the firm's general pool and each sub-pool in line with CASS 7.19.3 R and CASS 7.19.12 R .

Depositing client money

A firm , on receiving any client money , must promptly place this money into one or more accounts opened with any of the following:

a central bank;

a CRD credit institution ;

a bank authorised in a third country 6 ;

a qualifying money market fund .

[ Note : article 4(1) of the MiFID Delegated Directive 6 ]

A firm should ensure that any money other than client money that is deposited in a client bank account is promptly paid out of that account unless such money is a minimum sum required to open the account, or to keep the account open.

Approaches for the segregation of client money

The two approaches that a firm can adopt in discharging its obligations under this section are:

the 'normal approach'; or

the 'alternative approach' (see CASS 7.13.54 G to CASS 7.13.69 G ).

The normal approach

Unless otherwise permitted by any other rule in this chapter 2 , a firm using the normal approach must ensure that all client money it receives is paid directly into a client bank account at an institution referred to in CASS 7.13.3 R (1) to CASS 7.13.3 R (3) , rather than being first received into the firm's own account and then segregated.

Firms should ensure that clients and third parties make transfers and payments of any money which will be client money directly into the firm's client bank accounts .

Selection, appointment and review of third parties

A firm that does not deposit client money with a central bank must exercise all due skill, care and diligence in the selection, appointment and periodic review of the CRD credit institution , bank or qualifying money market fund where the money is deposited and the arrangements for the holding of this money . 6

The firm must consider the need for diversification as part of its due diligence under (1). 6

[ Note : article 4(2) first sub-paragraph of the MiFID Delegated Directive 6 ]

Firms should ensure that their consideration of a CRD credit institution , bank or qualifying money market fund under CASS 7.13.8 R focuses on the specific legal entity in question and not simply that person's group as a whole.

When a firm makes the selection, appointment and conducts the periodic review of a CRD credit institution , a bank or a qualifying money market fund , it must take into account:

the expertise and market reputation of the third party with a view to ensuring the protection of clients’ rights 6 ; and

any legal or regulatory 6 requirements or market practices related to the holding of client money that could adversely affect clients' rights.

[ Note : article 4(2) second sub-paragraph of the MiFID Delegated Directive 6 ]

In complying with CASS 7.13.8 R and CASS 7.13.10 R , a firm should consider, as appropriate, together with any other relevant matters:

the capital of the CRD credit institution or bank;

the amount of client money placed, as a proportion of the CRD credit institution or bank's capital and deposits, and, in the case of a qualifying money market fund , compared to any limit the fund may place on the volume of redemptions in any period;

the extent to which client money that the firm deposits or holds with any CRD credit institution or bank incorporated outside the UK would be protected under a deposit protection scheme in the relevant jurisdiction;

the credit-worthiness of the CRD credit institution or bank; and

to the extent that the information is available, the level of risk in the investment and loan activities undertaken by the CRD credit institution or bank and affiliated companies .

Client bank accounts

A firm must take the necessary steps to ensure that client money deposited, in accordance with CASS 7.13.3 R , in a central bank, a credit institution , a bank authorised in a third country 6 or a qualifying money market fund is held in an account or accounts identified separately from any accounts used to hold money belonging to the firm .

[ Note : article 2(1)(e) of the MiFID Delegated Directive 6 ]

An account which the firm uses to deposit client money under CASS 7.13.3 R (1) to CASS 7.13.3 R (3) must be a client bank account .

In respect of each 8 client bank account used by a firm to satisfy its obligation under CASS 7.13.3R(1) to (3) 8 :

the relevant bank's contractual counterparty must be the firm itself 8 ; and

) subject to paragraph (3A), 8 the firm must be 8 able to make withdrawals of client money promptly and, in any event, within one business day of a request for withdrawal.

Transitional provision CASS TP 1.1 .10AR applies to (2).

[deleted] 8

Where the requirement under sub-paragraph (2)(b) is not satisfied and provided that the client bank account is not included in a sub-pool , a firm may use a client bank account from which it will be unable to make a withdrawal of client money until the expiry of a period lasting: 8

up to 30 days ; or 8

provided the firm complies with CASS 7.13.14AR , from 31 to 95 days . 8

Paragraphs (2)(b) and (3A) 8 do not apply in respect of client money received by a firm in its capacity as a trustee firm .

CASS 7.13.13 R (2)(b) and CASS 7.13.13R(3A) 8 do not prevent a firm from depositing client money on terms under which a withdrawal may be made before the expiry of a fixed term or a notice period (whatever the duration), including where such withdrawal would incur a penalty charge to the firm .

8 A firm may only use one or more client bank accounts under CASS 7.13.13R(3A)(b) if:

prior to using any such client bank accounts , it:

produces a written policy that sets out:

for each of its business lines, the maximum proportion of the client money held by the firm that the firm considers would be appropriate to hold in such client bank accounts having regard to the need to manage the risk of the firm being unable to access client money when required;

the firm’s rationale for reaching its conclusion(s) under (i); and

the measures that it will put into place to comply with sub-paragraph (2)(a) of this rule , having regard to CASS 7.13.14CE ; and

provides each of its clients with a written explanation of the risks that arise as a result of the longer notice period for withdrawals that:

is clear, fair and not misleading; and

in respect of the medium of the explanation, satisfies whichever of COBS 6.1.13R (Medium of disclosure) or COBS 6.1ZA.19EU (Medium of disclosure) applies to the firm in respect of its obligations to provide information to the client ; and

while the firm uses any such client bank accounts , it:

takes appropriate measures to manage the risk of the firm being unable to access client money when required;

keeps its written policy under sub-paragraph (1)(a) under review, amending it where necessary; and

provides any of its clients to whom it has not previously provided the explanation under sub-paragraph (1)(b) with such a written explanation before it starts to hold or receive client money for them.

8 A firm must make and retain a written record of:

the written policy it produces under CASS 7.13.14AR(1)(a) ; and

each subsequent version of the written policy it produces as a result of CASS 7.13.14AR(2)(b) .

The firm must make the record:

under sub-paragraph (1)(a) on the date it produces the written policy; and

under sub-paragraph (1)(b) on the date it produces the new version of the written policy.

The firm must keep each record under this rule for a period of five years after the earlier of:

the date on which the version of the policy to which the record relates was superseded; and

the date on which the firm ceased to use client bank accounts under CASS 7.13.13R(3A)(b) .

8 Appropriate measures under CASS 7.13.14AR(2)(a) include the firm considering the need to make, and making where appropriate, quarterly or more frequent adjustments to the amount of client money held in client bank accounts under CASS 7.13.13R(3A)(b) , taking into consideration the following factors:

historic and expected future client money receipts and payments;

the firm’s own analysis of its exposure to the risk of being unable to meet instructions from its clients in relation to client money that it holds, applying an appropriate set of time horizons and stress scenarios; and

the content of the firm’s written policy under CASS 7.13.14AR(1)(a)(i) and (ii).

Compliance with (1) may be relied on as tending to establish compliance with CASS 7.13.14AR(2)(a) .

Contravention of (1) may be relied on as tending to establish contravention of CASS 7.13.14AR(2)(a) .

8 Under CASS 7.13.14AR(2)(b) a firm should consider whether amendments to its written policy under CASS 7.13.14AR(1)(a) are needed for any reason, including in light of the firm’s analysis in the course of its measures under CASS 7.13.14AR(2)(a) .

Each time a firm amends its written policy under CASS 7.13.14AR(1)(a) , it should also update the rationale for the amended policy under CASS 7.13.14AR(1)(a)(ii) .

The stress scenarios under CASS 7.13.14CE(1)(b) should include a variety of severe yet plausible institution-specific and market-wide liquidity shocks.

8 If a fixed term or notice period for a withdrawal from a client bank account is scheduled to expire on a day on which a firm would expect to be unable to make the withdrawal, and the result is that the total period for which the withdrawal is prevented is longer than that permitted under CASS 7.13.13R(3A)(a) or (b), then the firm would be in breach of that rule .

Such a situation could arise because the fixed term or notice period expires on a day which is not a business day for the relevant bank.

Firms should therefore schedule their withdrawals from client bank accounts under CASS 7.13.13R(3A)(a) and (b) to avoid such breaches.

8 Firms that hold client money using a client bank account under CASS 7.13.13R(3A)(b) and to which SUP 16.14 (Client money and asset return) applies may need to fill in their CMARs in the way set out at SUP 16.14.7R (Reporting of ‘unbreakable’ client money deposits).

CASS 7.13.13 R does not prevent a firm from depositing client money in overnight money market deposits which are clearly identified as being client money (for example, in the client bank account acknowledgment letter).

Firms are reminded of their obligations under CASS 7.18 (Acknowledgment letters) for client bank accounts . Firms should also ensure that client bank accounts meet the requirements in the relevant Glossary definitions, including regarding the titles given to the accounts.

A firm may open one or more client bank accounts in the form of a general client bank account , a designated client bank account or a designated client fund account 9 . The requirements of CASS 7.13.13 R (2) and CASS 7.13.13 R (3) apply for each type of client bank account .

A designated client bank account may be used for a client only where that client has consented to the use of that account. If a firm deposits client money into a designated client bank account then, in the event of a secondary pooling event in respect of the relevant bank, the account will not be pooled with any general client bank account or designated client fund account .

A designated client fund account may be used for a client only where that client has consented to the use of that account and all other designated client fund accounts which may be pooled with it. For example, a client who consents to the use of bank A and bank B should have his money held in a different designated client fund account at bank B from a client who has consented to the use of banks B and C. If a firm deposits client money into a designated client fund account then, in the event of a secondary pooling event in respect of the relevant bank, the account will not be pooled with any general client bank account or designated client bank account .

Diversification of client money

6 In CASS 7.13.20R to CASS 7.13.25R client money means money deposited under CASS 7.13.3R and therefore includes money deposited under CASS 7.13.3R :

in an account opened with a qualifying money market fund ; or

invested in units or shares of a qualifying money market fund .

But client money held under CASS 7.14.2R does not fall within the scope of the diversification provisions at CASS 7.13.20R to CASS 7.13.25R .

Notwithstanding the requirement at CASS 7.13.22 R a firm must limit the funds that it deposits or holds with a relevant group entity or combination of such entities so that the value of those funds do not at any point in time exceed 20 per cent of the total of all the client money held by the firm under CASS 7.13.3R 6 .

[ Note: article 4(3) first sub-paragraph of the MiFID Delegated Directive ] 6

For the purpose of CASS 7.13.20 R an entity is a relevant group entity if it is:

a CRD credit institution ; or 6

a bank authorised in a third country ; or 6

a qualifying money market fund ; or 6

the entity operating or managing the qualifying money market fund ; and 6

a member of the same group as that firm .

6 A firm need not comply with CASS 7.13.20R if, following an assessment, it is able to demonstrate that the requirement under that rule is not proportionate, in view of:

the small balance of client money that it holds;

the nature, scale and complexity of its business; and

the safety offered by the relevant third parties referred to under CASS 7.13.20R .

A firm must review any assessment it makes under (1) periodically.

A firm must notify its assessment under (1) and its reviewed assessments under (2) to the FCA in accordance with CASS 7.13.21CR .

[ Note: article 4(3) second sub-paragraph of the MiFID Delegated Directive ]

6 In relation to the requirement to take account of a firm’s “small balance” of client money at CASS 7.13.21AR(1)(a) :

the FCA expects a firm that would not qualify to be a CASS small firm under the rules in CASS 1A.2 , ignoring any safe custody assets that it holds, to have difficulty in justifying using the approach in CASS 7.13.21AR(1) ;

a firm should calculate its client money balance for these purposes in the same way required under CASS 1A.2.3R , and base its assessment under CASS 7.13.21AR(1)(a) on either:

the highest total amount of client money that it held during the year ending on the date of the assessment; or

if it did not hold client money in the previous calendar year, the highest total amount of client money that the firm projects it will hold during the year starting on the date of the assessment;

this means that it may be possible for a CASS medium firm or a CASS large firm to justify using the approach in CASS 7.13.21AR(1) on the basis of small client money balances; and

in any case, a firm seeking to take that approach should also consider the points at CASS 7.13.21AR(1) (b) and (c) as part of its assessment.

In relation to the requirement under CASS 7.13.21AR(2) to review the assessment under CASS 7.13.21AR(1) :

a firm should undertake a review and, where appropriate, consider whether to cease to use the approach in CASS 7.13.21AR(1) when it becomes aware of a change in the circumstances that might have led the firm to a different conclusion on its previous assessment; and

in any case a firm should undertake a review at least one year after its previous assessment until it ceases to use the approach in CASS 7.13.21AR(1) .

A firm may, subject to paragraph (2)(a), wish to perform the assessment and any periodic reviews under CASS 7.13.21AR when the obligations under CASS 1A.2.9R arise.

Firms are reminded that, independent of CASS 7.13.21AR , each firm is required by CASS 1A.2.2R to determine once every year whether it is a CASS large firm , CASS medium firm or CASS small firm .

6 Where a firm decides following an assessment under CASS 7.13.21AR(1) that it intends to use the approach under that rule , the firm must give the FCA notice of this upon reaching that decision and before it starts to use that approach.

Where, following a review under CASS 7.13.21AR(2) a firm decides that it will either cease to use the approach under CASS 7.13.21AR(1) or continue to use it, it must give the FCA notice of this upon reaching that decision.

Subject to the requirement at CASS 7.13.20 R , and in accordance with Principle 10 and CASS 7.12.1 R , a firm must:

periodically review 6 whether it is appropriate to diversify (or further diversify) the third parties with which it deposits some or all of the client money that the firm holds; and

whenever it concludes that it is appropriate to do so, it must make adjustments accordingly to the third parties it uses and to the amounts of client money deposited with them.

[ Note: article 4(2) first sub-paragraph of the MiFID Delegated Directive ] 6

In complying with the requirement in CASS 7.13.22 R to periodically review 6 whether diversification (or further diversification) is appropriate, a firm should have regard to:

whether it would be appropriate to deposit client money in client bank accounts opened at a number of different third parties;

whether it would be appropriate to limit the amount of client money the firm holds with third parties that are in the same group as each other;

whether risks arising from the firm's business models create any need for diversification (or further diversification);

the market conditions at the time of the assessment; and

the outcome of any due diligence carried out in accordance with CASS 7.13.8 R and CASS 7.13.10 R .

The rules in SUP 16.14 provide that CASS large firms and CASS medium firms must report to the FCA in relation to the identity of the entities with which they deposit client money and the amounts of client money deposited with those entities. The FCA will use that information to monitor compliance with the diversification rule in CASS 7.13.20 R .

A firm must make a record of the grounds upon which it satisfies itself as to the appropriateness of its selection and appointment of a bank or a qualifying money market fund under CASS 7.13.8 R . The firm must make the record on the date it makes the selection or appointment and must keep it from that date until five years after the firm ceases to use that particular person for the purposes of depositing client money under CASS 7.13.3 R .

A firm must make a record of each periodic review of its selection and appointment of a bank or a qualifying money market fund that it conducts under CASS 7.13.8 R , its considerations and conclusions. The firm must make the record on the date it completes the review and must keep it from that date until five years after the firm ceases to use that particular person for the purposes of depositing client money under CASS 7.13.3 R .

A firm must make a record of each periodic review that it conducts under CASS 7.13.22 R , its considerations and conclusions. The firm must make the record on the date it completes out the review and must keep it for five years from that date.

Qualifying money market funds

Where a firm deposits client money with a qualifying money market fund , the firm's holding of those units or shares 6 in that fund will be subject to any applicable requirements of the custody rules .

[ Note: recital 4 to the MiFID Delegated Directive 6 ]

A firm that places client money in a qualifying money market fund should ensure that it has the permissions required to invest in and hold units in that fund and must comply with the rules that are relevant for those activities.

A firm must inform a client that money placed with a qualifying money market fund will not be held in accordance with the requirements for holding client money . 6

A firm must ensure that, having provided the information to the client under (1), the client gives its explicit consent to the placement of their money in a qualifying money market fund . 6

[ Note: article 4(2) third sub-paragraph to the MiFID Delegated Directive 6 ]

[deleted] 6

6 A firm may comply with CASS 7.13.28 R(1) by informing the client that the units or shares in the qualifying money market fund will be held as safe custody assets .

Segregation in different currency

A firm may segregate client money in a different currency from that in which it was received or in which the firm is liable to the relevant client . If it does so the firm must ensure that the amount held is adjusted each day to an amount at least equal to the original currency amount (or the currency in which the firm has its liability to its clients , if different), translated at the previous day's closing spot exchange rate.

Mixed remittance

Except in the circumstances described in CASS 7.13.72 R (1)(a) , where a firm using the normal approach receives a mixed remittance it should:

in accordance with CASS 7.13.6 R , take necessary steps to ensure the mixed remittance is paid directly into a client bank account ; and

promptly and, in any event no later than one business day after the payment of the mixed remittance into the client bank account has cleared, pay the money that is not client money out of the client bank account .

Physical receipts of client money

Where a firm receives client money in the form of cash, a cheque or other payable order, it must:

pay the money in accordance with CASS 7.13.6 R , promptly, and no later than on the business day after it receives the money into a client bank account , unless either:

the money is received by a business line for which the firm uses the alternative approach, in which case the money must be paid into the firm's own bank account promptly, and no later than on the business day after it receives the money ; or

the firm is unable to meet the requirement in (1) because of restrictions under the regulatory system or law regarding the receipt and processing of money , in which case the money must be paid in accordance with CASS 7.13.6 R as soon as possible;

if the firm holds the money in the meantime before paying it in accordance with CASS 7.13.6 R (or in the case of (1)(a), into its own bank account), hold it in a secure location in line with Principle 10; and

in any case, record the receipt of the money in the firm's books and records in line with CASS 7.15 (Records, accounts and reconciliations).

Where a firm receives client money in the form of a cheque that is dated with a future date, unless the firm returns the cheque it must:

pay the money in accordance with CASS 7.13.6 R , promptly, and no later than the date on the cheque if the date is a business day or the next business day after the date on the cheque;

in the meantime, hold it in a secure location in accordance with Principle 10; and

record the receipt of the money in the firm's books and records in accordance with CASS 7.15 (Records, accounts and reconciliations).

Appointed representatives, tied agents, field representatives and other agents

A firm must ensure that client money received by its appointed representatives , tied agents , field representatives or other agents is:

received directly into a client bank account of the firm , where this would have been required if such client money had been received by the firm otherwise than through its appointed representatives , tied agents , field representatives or other agents (see CASS 7.13.6 R and CASS 7.13.7 G ); or

if it is received in the form of a cheque or other payable order:

paid into a client bank account of the firm promptly and, in any event, no later than the next business day after receipt; or

forwarded to the firm or, in the case of a field representative , forwarded to a specified business address of the firm , to ensure that the money arrives at the specified business address promptly and, in any event, no later than the close of the third business day .

Under CASS 7.13.34 R (2)(b) , client money received on business day one should be forwarded to the firm or specified business address of the firm promptly and, in any event, no later than the next business day after receipt ( business day two) in order for it to reach that firm or specified business address by the close of the third business day . Procedures requiring the client money in the form of a cheque to be sent to the firm or the specified business address of the firm by first class post and, in any event, no later than the next business day after receipt, would fulfil CASS 7.13.34 R (2)(b) .

Allocation of client money receipts

A firm must allocate any client money it receives to an individual client promptly and, in any case, no later than ten business days following the receipt (or where subsequent to the receipt of money it has identified that the money , or part of it, is client money under CASS 7.13.37 R , no later than ten business days following that identification).

Pending a firm's allocation of a client money receipt to an individual client under (1), it must record the received client money in its books and records as "unallocated client money".

If a firm receives money (either in a client bank account or an account of its own) which it is unable to immediately identify as client money or its own money , it must:

take all necessary steps to identify the money as either client money or its own money ;

if it considers it reasonably prudent to do so, given the risk that client money may not be adequately protected if it is not treated as such, treat the entire balance of money as client money and record the money in its books and records as "unidentified client money" while it performs the necessary steps under (1).

If a firm is unable to identify money that it has received as either client money or its own money under CASS 7.13.37 R , it should consider whether it would be appropriate to return the money to the person who sent it or to the source from where it was received ( 3 for example, the banking institution).

Money due to a client from a firm

7 CASS 7.13.39R and CASS 7.13.40G do not apply to a firm following a primary pooling event .

7 CASS 7A.2.10AR and CASS 7A.2.10BG (Money due to a client from a firm after a primary pooling event) apply to a firm following a primary pooling event in respect of money due to a client from a firm .

Pursuant to the client money segregation requirements , a firm that is operating the normal approach and is liable to pay money 7 to a client must 7 promptly, and in any event no later than one business day after the money is due and payable, pay the money :

to, or to the order of, the client ; or

into a client bank account .

Where the firm has payment instructions from the client the firm should pay the money to the order of the client , rather than into a client bank account .

Prudent segregation

7 Subject to paragraph (2), CASS 7.13.41R to CASS 7.13.49R do not apply to a firm following a primary pooling event .

If, at the time of a primary pooling event , a firm has retained money in a client bank account for the purposes of CASS 7.13.41R , that money remains client money for the purposes of the client money rules and the client money distribution and transfer rules .

If it is prudent to do so to prevent a shortfall in client money on the occurrence of a primary pooling event , a firm may pay money of its own into a client bank account and subsequently retain that money in the client bank account ( prudent segregation ). Money that the firm retains in a client bank account under this rule 7 is client money for the purposes of the client money rules and the client money distribution and transfer rules 7 .

A firm must make and retain an up-to-date record of all payments made under CASS 7.13.41 R . (See further CASS 7.13.50 R to CASS 7.13.53 R : the prudent segregation record.)

If a firm intends to pays its own money into a client bank account under CASS 7.13.41 R it must establish a written policy that is approved by its governing body (and retain such policy for a period of at least five years after the date it ceases to retain such money in a client bank account under CASS 7.13.41 R ) detailing:

the specific anticipated risks in relation to which it would be prudent for the firm to make such payments into a client bank account ;

why the firm considers that the use of such a payment is a reasonable means of protecting client money against each of the risks set out in the policy; and

the method that the firm will use to calculate the amount required to address each risk set out in the policy.

The firm may amend its written policy to reflect changes in the specific anticipated risks in relation to which it would be prudent for the firm to make payments into a client bank account under CASS 7.13.41 R .

The firm's written policy must not conflict with the client money rules or the client money distribution and transfer rules 7 . If there is a conflict, the client money rules and the client money distribution and transfer rules 7 will prevail.

In the event the firm faces a risk not contemplated under its current policy it will not be prevented from prudently segregating money as client money in accordance with these rules but the policy must be created or amended, as applicable, as soon as reasonably practicable.

Examples of the types of risks that a firm may wish to provide protection for under CASS 7.13.41 R include systems failures and business that is conducted on non- business days where the firm would be unable to pay any anticipated shortfall into its client bank accounts .

To the extent that the firm no longer considers it prudent to retain money in its client bank account pursuant to CASS 7.13.41 R in order to ensure that client money is protected, the firm may cease to treat that money as client money .

Any money that the firm ceases to treat as client money pursuant to CASS 7.13.48 R must be withdrawn from its client bank account as an excess under CASS 7.15.29 R as part of its next reconciliation.

Prudent segregation record

7 Subject to paragraph (2), CASS 7.13.50R to CASS 7.13.52G do not apply to a firm following a primary pooling event .

Where a firm holds a prudent segregation record under CASS 7.13.53R following a primary pooling event , the prudent segregation record must continue to satisfy the requirements set out in CASS 7.13.51R .

A firm must create and keep up-to-date records so that the amount of money paid into client bank accounts and retained as client money pursuant to CASS 7.13.41 R or withdrawn pursuant to CASS 7.13.49 R , and the reasons for such payment, retention and withdrawal can be easily ascertained (the prudent segregation record ).

The prudent segregation record must record:

the outcome of the firm's calculation of its prudent segregation ;

the amounts paid into or withdrawn from a client bank account pursuant to CASS 7.13.41 R or CASS 7.13.49 R ;

why each payment or withdrawal is made;

in respect of the firm's written policy required by CASS 7.13.43 R the firm must record, as applicable, either:

that the payment or withdrawal is made in accordance with that policy; or

that the policy will be created or amended to include the reasons for this payment or withdrawal;

that the money was paid by the firm in accordance with CASS 7.13.41 R or withdrawn by the firm in accordance with CASS 7.13.49 R ; and

the up-to-date total amount of client money held pursuant to CASS 7.13.41 R .

Firms are reminded that payments and records made in accordance with CASS 7.13.51 R should not be used as a substitute for a firm keeping accurate and timely records in accordance with CASS 7.15 (Records, accounts and reconciliations) and requirements under SYSC 4.1.1 R (General requirements) and SYSC 6.1.1 R (Compliance).

The prudent segregation record must be retained for five years after the firm ceases to retain money as client money pursuant to CASS 7.13.41 R .

The alternative approach to client money segregation

7 Subject to paragraphs (2) and (3), CASS 7.13.59R , CASS 7.13.62R(3) , CASS 7.13.62R(4) and CASS 7.13.63R to CASS 7.13.67R do not apply to a firm following its failure .

If, at the time of a primary pooling event , a firm has retained money in a client bank account for the purposes of alternative approach mandatory prudent segregation under CASS 7.13.65R , that money remains client money for the purposes of the client money rules and the client money distribution and transfer rules .

Where a firm holds an alternative approach mandatory prudent segregation record under CASS 7.13.68R following a primary pooling event , the alternative approach mandatory prudent segregation record must continue to satisfy the requirements set out in CASS 7.13.67R .

In certain circumstances, use of the normal approach for a particular business line of a firm could lead to significant operational risks to client money protection. These may include a business line under which clients' transactions are complex, numerous, closely related to the firm's proprietary business and/or involve a number of currencies and time zones. In such circumstances, subject to meeting the relevant criteria and fulfilling the relevant notification and audit requirements, a firm may use the alternative approach to segregating client money for that business line.

Under the alternative approach, client money is received into and paid out of a firm's own bank account. A firm that adopts the alternative approach to segregating client money should (in line with CASS 7.15.16 R (2) ) carry out an internal client money reconciliation on each business day ('T0') and calculate how much money it either needs to withdraw from, or place in from its own bank account or its client bank account as a result of any discrepancy arising between its client money requirement and its client money resource as at the close of business on the previous business day ('T-1').

The alternative approach mandatory prudent segregation required under CASS 7.13.65 R is designed to address the risks that:

client money in a firm's own bank account may not be available to be pooled for distribution to clients on the occurrence of a primary pooling event ; and

at the time of a primary pooling event the firm may not have segregated in its client bank account a sufficient amount of client money to meet its client money requirement .

A firm that wishes to adopt the alternative approach for a particular business line must first establish, and document in writing, its reasons for concluding, that:

adopting the normal approach would lead to greater operational risks to client money protection compared to the alternative approach;

adopting the alternative approach (including complying with the requirements for alternative approach mandatory prudent segregation under CASS 7.13.65 R ), would not result in undue operational risk to client money protection; and

the firm has systems and controls that are adequate to enable it to operate the alternative approach effectively and in compliance with Principle 10 (Clients' assets).

A firm must retain any documents created under CASS 7.13.55 R in relation to a particular business line for a period of at least five years after the date it ceases to use the alternative approach in connection with that business line.

At least three months before adopting the alternative approach for a particular business line, a firm must:

inform the FCA in writing that it intends to adopt the alternative approach for that particular business line; and

if requested by the FCA , make any documents it created under CASS 7.13.55 R 2 available to the FCA for inspection.

In addition to the requirement under CASS 7.13.57 R , before adopting the alternative approach, a firm must send a written report to the FCA prepared by an independent auditor of the firm in line with a reasonable assurance engagement , stating the matters set out in (2).

The written report in (1) must state whether, in the auditor's opinion:

the firm's systems and controls are suitably designed to enable it to comply with CASS 7.13.62 R to CASS 7.13.65 R ; and

the firm's calculation of its alternative approach mandatory prudent segregation amount under CASS 7.13.65 R is suitably designed to enable the firm to comply with CASS 7.13.65 R .

A firm that uses the alternative approach must review, at least on an annual basis and with no more than one year between each review, whether its reasons for adopting the alternative approach for a particular business line, as documented under CASS 7.13.55 R , continue to be valid.

If, following the review in (1), a firm finds that its reasons for adopting the alternative approach are no longer valid for a particular business line, it must stop using the alternative approach for that business line as soon as reasonably practicable, and in any event within six months of the conclusion of its review in (1).

A firm that uses the alternative approach must not materially change how it will calculate and maintain the alternative approach mandatory prudent segregation amount under CASS 7.13.65 R unless:

an auditor of the firm has prepared a report that complies with the requirements in CASS 7.13.58 R (2)(b) in respect of the firm's proposed changes; and

the firm provides a copy of the report prepared by the auditor under (a) to the FCA before implementing the change.

A firm is reminded that, under SUP 3.4.2 R , it must take reasonable steps to ensure that its auditor has the required skill, resources and experience to perform its function.

A firm that uses the alternative approach for a particular business line must, on each business day ('T0'):

receive any money from and pay any money to (or, in either case, on behalf of) clients into and out of its own bank accounts;

perform the necessary reconciliations of records and accounts required under CASS 7.15 (Records, accounts and reconciliations);

adjust the balances held in its client bank account (by effecting transfers between its own bank account and its client bank account ) to address any difference arising between its client money requirement and its client money resource as at the close of business on the previous business day ('T-1'), so that the correct amount reflected in the reconciliations under (2) is segregated in its client bank account ; and

subject to CASS 7.13.63R below, keep segregated in its client bank account the balance held under (3) until it has performed a reconciliation on the following business day ('T+1') and as a result of that reconciliation is undertaking further adjustments under (3).

During the period between the adjustment in CASS 7.13.62 R (3) and the completion of the next reconciliations in CASS 7.13.62 R (2) , a firm that uses the alternative approach for a particular business line may:

increase the balance held in its client bank account by making intra-day transfers (during T0) from its own bank account to its client bank account before the completion of the internal client money reconciliation under CASS 7.13.62 R (2) (that is expected sometime later on T0) only if:

the firm reasonably expects that the client money requirement for the previous business day (T-1) will increase above the client money resource currently (during T0) held in its client bank account ; and

such reasonable expectations are based on the working calculation of the client money requirement relating to the previous business day (T-1) that the firm has already determined on that business day (during T0) (as part of the process of completing its internal client money reconciliation); or

decrease the balance held in its client bank account by making intra-day transfers (during T0) from its client bank account to its own bank account before the completion of the internal client money reconciliation under CASS 7.13.62 R (2) (that is expected sometime later on T0) only if:

the firm reasonably expects that the client money requirement for the previous business day (T-1) will decrease below the client money resource currently held (during T0) in its client bank account ; and

such reasonable expectations are based on the working calculation of the client money requirement relating to the previous business day (T-1) that the firm has already determined on that business day (during T0) (as part of the process of completing its internal client money reconciliation ).

However, in doing so, a firm must act prudently and should take appropriate steps to manage the risk of not having segregated an amount that appropriately reflects its actual client money requirement at any given time.

It is anticipated that CASS 7.13.63 R may be used by firms which maintain client bank accounts in a number of different time zones and making adjustments to the balances of those client bank accounts is dependent on meeting cut off times for money transfers in those time zones.

A firm that uses the alternative approach must, in addition to CASS 7.13.62 R , pay an amount (determined in accordance with this rule ) of its own money into its client bank account and subsequently retain that money in its client bank account ( alternative approach mandatory prudent segregation ). The amount segregated by a firm in its client bank account under this rule is client money for the purposes of the client money rules and the client money distribution and transfer rules 7 .

The amount required to be segregated under this rule must be an amount that a firm reasonably determines would be sufficient, at the time it makes the determination, to protect client money against the risk that at any time in the following three months the following categories of client money may not have been fully segregated in its client bank account or may not be (or become) available for pooling under CASS 7A.2.4R (1) , were a primary pooling event to occur:

client money that is received and held by the firm in its own bank account during the period between:

the firm's adjustment of client bank account balances under CASS 7.13.62 R (3) on a particular business day ; and

the firm's subsequent adjustments under CASS 7.13.62 R (3) on the following business day ; and

money received and held by the firm in its own bank account which the firm does not initially identify as part of its client money requirement , but which subsequently does become part of its client money requirement ;

with the effect that the firm's alternative approach mandatory prudent segregation under this rule will reduce, as far as possible, any shortfall that might have been produced as a result of (a) or (b) on the occurrence of a primary pooling event .

Subject to (c), in reaching its determination under (2) of the amount of money that would be sufficient to address the risks referred to in (2) for the forthcoming three months, a firm must take into account the following in respect of each business line for which it uses the alternative approach, and for at least the previous three months:

the firm's client money requirement over the course of that prior period (excluding any amount that was required to be segregated under this rule during that prior period for the purposes of alternative approach mandatory prudent segregation );

the daily adjustment payments that the firm made into its client bank account under CASS 7.13.62 R (3) during that prior period; and

the amount of money received by the firm in its own bank account which it did not initially identify as part of its client money requirement , but which subsequently, and during that prior period, became part of its client money requirement ;

as shown in its internal records.

In reaching its determination under (2) a firm must also take into account, but at all times having regard to the requirement under (2), any impact that particular events, the seasonal nature of each relevant business line, or any other aspect of those business lines may have on:

the firm's client money requirement during the forthcoming three months for which the amount of alternative approach mandatory prudent segregation required under this rule is being determined;

the daily adjustment payments that the firm is likely to make into its client bank account under CASS 7.13.62 R (3) in that same period; and

the amount of unidentified receipts of money that the firm is likely to receive into its own bank account and which will subsequently, in that same period, become part of its client money requirement .

If, at the time of its determination under (2), the firm has not been trading for three months in a business line for which it is using the alternative approach, then it must use the records that are available to it and must also factor in reasonable forecasts, as required under (b), to establish a three-month reference period.

A firm must, at regular intervals that are at least quarterly, repeat and complete the combined process of:

determining the amount that it is required to segregate for the purposes of alternative approach mandatory prudent segregation under (2) and (3);

making necessary adjustments to its records to reflect any changes to its client money requirement (in accordance with CASS 7.16.16 R (3) and CASS 7.16.17 R (2) ); and

paying any additional amounts of its own money into its client bank account to increase the firm's alternative approach mandatory prudent segregation or withdrawing any excess amounts from its client bank account to decrease the firm's alternative approach mandatory prudent segregation after it has adjusted its records under (ii).

The combined process of (a)(i) to (iii) must take no longer than ten business days .

To the extent that a firm's compliance with (a)(i) and (ii) results in there being an excess in the firm's client bank account , the firm may cease to treat that money as client money.

A firm must ensure that the individual responsible for CASS oversight under CASS 1A.3.1 R , CASS 1A.3.1A R or CASS 1A.3.1C R (as appropriate) reviews the adequacy of the amount of the firm's alternative approach mandatory prudent segregation maintained under this rule at least annually.

A firm must create and keep up-to-date records so that any amount of money that is, pursuant to CASS 7.13.65 R :

paid into a client bank account and retained as client money ; or

withdrawn from a client bank account ;

can be easily ascertained (the alternative approach mandatory prudent segregation record ).

The alternative approach mandatory prudent segregation record under CASS 7.13.66 R must record:

the date of the first determination under CASS 7.13.65 R (2) and each subsequent review undertaken under CASS 7.13.65 R (4) , and the total amount that the firm determined was required to be segregated under CASS 7.13.65 R (2) as at that date;

the date of any payment of the firm's own money into a client bank account , or withdrawal of any excess from a client bank account under CASS 7.13.65 R , and for each such occasion:

the amount of the payment or withdrawal;

the fact that the money was paid or withdrawn by the firm in accordance with CASS 7.13.65 R ; and

as at that date, the total amount actually segregated by the firm under CASS 7.13.65 R .

The alternative approach mandatory prudent segregation record must be retained for five years after the firm ceases to segregate any money in accordance with CASS 7.13.65 R .

Nothing in CASS 7.13.54 G to CASS 7.13.68 R prevents a firm from also making use of the prudent segregation rule in CASS 7.13.41 R .

Use of the normal approach in relation to certain regulated clearing arrangements

CASS 7.13.72 R sets out the circumstances under which a firm , that would otherwise be required to comply with the requirement in CASS 7.13.6 R to receive client money directly into a client bank account , must receive (or is permitted to receive) 5 client money into its own bank account.

A firm that is also a clearing member that is using the normal approach in connection with regulated clearing arrangements must use reasonable endeavours to ensure it is not required under its arrangements with an authorised central counterparty to receive mixed remittances from or pay mixed remittances to the authorised central counterparty through a single bank account.

If, notwithstanding its reasonable endeavours in accordance with CASS 7.13.71 R , the firm is required under its arrangements with an authorised central counterparty to:

receive mixed remittances from the authorised central counterparty 5 into a single bank account and pay mixed remittances to the authorised central counterparty from that bank account; or

pay mixed remittances to the authorised central counterparty using a single bank account;

then such arrangements for client money are permitted if the firm complies, 5 as applicable, with (2) and CASS 7.13.73 R .

In either or both of the circumstances described in (1): 5

the firm must pay any mixed remittances to the authorised central counterparty 5 from its own bank account; and 5

the firm is permitted to pay any remittances to the authorised central counterparty that consist only of client money from that same bank account.

In the circumstances described in (1)(a), the firm is permitted to receive any remittances that consist only of client money from the authorised central counterparty into the same bank account that it uses under (2)(a), if it complies with (b). 5

Where, in the circumstances described in (1)(a), a 5 mixed remittance or a remittance that consists only of client money from an authorised central counterparty is 5 received into a firm's own account, the firm 5 must transfer any 5 client money element of the remittance 4 to its client bank account promptly and, in any event, no later than the next business day after receipt.

7 Subject to paragraphs (2) and (3), CASS 7.13.73R to CASS 7.13.75R do not apply to a firm following a primary pooling event .

If, at the time of a primary pooling event , a firm has retained money in a client bank account for the purposes of clearing arrangement mandatory prudent segregation under CASS 7.13.73R , that money remains client money for the purposes of the client money rules and the client money distribution and transfer rules .

Where a firm holds a clearing arrangement mandatory prudent segregation record under CASS 7.13.76R following a primary pooling event , the clearing arrangement mandatory prudent segregation record must continue to satisfy the requirements set out in CASS 7.13.75R .

Where the circumstances described in CASS 7.13.72 R (1)(a) apply to a firm it must pay an amount (determined in accordance with this rule ) of its own money into its client bank account and retain that money in its client bank account ( clearing arrangement mandatory prudent segregation ). The amount segregated by a firm in its client bank account under this rule will be client money for the purposes of the client money rules and the client money distribution and transfer rules 7 .

The amount required to be segregated under this rule must be an amount that a firm reasonably determines would be sufficient, at the time it makes the determination, to protect client money against the risk that at any time in the following three months client money received from the authorised central counterparty and held by the firm in its own bank account following receipt of these monies under CASS 7.13.72 R (1)(a) and until their transfer in accordance with CASS 7.13.72 R (2)(b) may not have been fully segregated in its client bank account or may not be (or become) available for pooling under CASS 7A.2.4R (1) , were a primary pooling event to occur with the effect that the firm's clearing arrangement mandatory prudent segregation under this rule will reduce, as far as possible, any shortfall that might have been produced as a result of this risk on the occurrence of a primary pooling event .

Subject to (c), in reaching its determination under (2) of the amount of money that would be sufficient to address the risks referred to in (2) for the forthcoming three months, a firm must take into account the following for at least the previous three months:

the firm's client money requirement over the course of that prior period (excluding any amount that was required to be segregated under this rule during that prior period for the purposes of clearing arrangement mandatory prudent segregation ); and

the payments that the firm made into its client bank account under CASS 7.13.72 R (2)(b) during that prior period;

In reaching its determination under (2) a firm must also take into account, at all times having regard to the requirement under (2), any impact that particular events, the seasonal nature of each relevant business line, or any other aspect of those business line(s) may have on:

the firm's client money requirement during the forthcoming three months for which the amount of clearing arrangement mandatory prudent segregation required under this rule is being determined; and

the payments that the firm is likely to make into its client bank account under CASS 7.13.72 R (2)(b) .

If, at the time of its determination under (2), the firm has not been trading for three months in a business line for which it is using the normal approach in connection with regulated clearing arrangements , then it must use the records that are available to it and must also factor in reasonable forecasts, as required under (b), to make up a three-month reference period.

determining the amount that it is required to segregate for the purposes of clearing arrangement mandatory prudent segregation under (2) and (3);

making necessary adjustments to its records to reflect any changes to its client money requirement in accordance with CASS 7.16.16 R (3) and CASS 7.16.17 R (1) ; and

paying any additional amounts of its own money into its client bank account to increase the firm's clearing arrangement mandatory prudent segregation or withdrawing any excess amounts from its client bank account to decrease the firm's clearing arrangement mandatory prudent segregation after it has adjusted its records under (ii).

To the extent that a firm's compliance with (a)(i) and (ii) results in there being an excess in the firm's client bank account , the firm may cease to treat that money as client money .

A firm must ensure that the individual responsible for CASS oversight under CASS 1A.3.1 R , CASS 1A.3.1A R or CASS 1A.3.1C R (as appropriate) reviews the adequacy of the amount of the firm's clearing arrangement mandatory prudent segregation maintained under this rule at least annually.

Clearing arrangement mandatory prudent segregation record

A firm must create and keep up-to-date records so that any amount of money that is, pursuant to CASS 7.13.73 R :

can be easily ascertained (the clearing arrangement mandatory prudent segregation record ).

The clearing arrangement mandatory prudent segregation record under CASS 7.13.74 R must record:

the date of the first determination under CASS 7.13.73 R (2) and each subsequent review undertaken under CASS 7.13.73 R (4) , and the total amount that the firm determined was required to be segregated under CASS 7.13.73 R (2) as at that date;

the date of any payment of the firm's own money into a client bank account , or withdrawal of any excess from a client bank account under CASS 7.13.73 R (4)(a)(iii) , and for each such occasion:

the fact that the money was paid or withdrawn by the firm in accordance with CASS 7.13.73 R ; and

as at that date, the total amount actually segregated by the firm under CASS 7.13.73 R .

The clearing arrangement mandatory prudent segregation record must be retained for five years after the firm ceases to segregate any money in accordance with CASS 7.13.73 R .

Nothing in CASS 7.13.73 R to CASS 7.13.76 R prevents a firm from making use of the prudent segregation rule in CASS 7.13.41 R .

The obligation to use reasonable endeavours referred to in CASS 7.13.71 R is a continuing obligation. Firms should at least on an annual basis, whether it is possible for payments of client money between the firm and the authorised central counterparties to be made separately from house monies and for such payments to be received into and made from its client bank accounts .

Where a firm operates a sub-pool in accordance with CASS 7.19 (Clearing member client money sub-pools), the references to client bank accounts in CASS 7.13.70 G to CASS 7.13.78 G should be read as client bank accounts pertaining to the relevant sub-pool .

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• Working, jobs and pensions
• Contracts and working hours

Working through an umbrella company

Find out about how and what you’ll be paid and how to check your pay when you’re employed by an umbrella company as a temporary worker.

How an umbrella company works

An umbrella company is a business often used by recruitment agencies to pay temporary workers.

In most cases, the umbrella company employs you and pays your wages through PAYE. It does not find temporary work for you, this is done by the recruitment agency (also known as an employment business).

Although the umbrella company is your employer and will pay you, the work you carry out will be for one of the recruitment agency’s clients. This work is often on a short-term basis.

What happens after you contact a new recruitment agency

The first time you contact a recruitment agency the steps to set up temporary work and employ you begin. The process may involve:

• a client — the business that needs temporary workers
• a recruitment agency — that finds temporary workers for a client
• an umbrella company — your employer for temporary work from that recruitment agency
• you (the worker) — who contacts the agency about temporary work

Each plays a role in the supply chain and has a contract for the temporary work but with different responsibilities. The supply chain often works in the following way.

The client needs temporary workers

The client is the business that needs temporary workers. It sets up a contract with a recruitment agency to find and engage temporary workers.

The recruitment agency searches for workers

The agency finds a suitable candidate from its contacts or advertises the role, stating the pay rate (weekly, daily, or hourly). You may not get paid this rate, because it usually includes the umbrella company’s operating costs.

Some clients may assess whether the off-payroll working rules apply to the role. These rules apply where workers contract though their own limited company or an intermediary . The  check employment status for tax tool can help them assess this.

If the client decides that off-payroll working rules would apply to the role, the job advert may describe it as being ‘inside IR35’. This may mean you are deemed to be an employee or the client (or recruitment agency) may ask you to be employed through an umbrella company.

You become an umbrella company employee

Before the recruitment agency can offer you a temporary role (assignment) they may ask you to be employed by one of their preferred umbrella companies. You may be able to choose your own.

The agency must give you a Key Information Document which should include:

• the umbrella company for all temporary work from this agency
• the minimum assignment rate paid to the umbrella company
• what the umbrella company will deduct
• your minimum gross pay

The recruitment agency agrees terms with the umbrella company

The agency sets up a contract with the umbrella company. This outlines that the umbrella company is responsible for:

• employing you and paying your wages in line with the Key Information Document
• invoicing the agency for the time you’ve worked

The recruitment agency discusses the role with you

For each new temporary role, the recruitment agency must give you new assignment details to confirm:

• who you’re working for
• your job title
• what you’re going to do
• the notice period to end the assignment
• where you’ll work
• any health and safety issues (for example, if you need personal protective equipment)

Your employment rights

As an employee of an umbrella company, you have the same employment rights as other employees .

You have a right to a written employment contract. An Acas guide to employment contracts explains how they work and what must be written in them.

You have the right to be paid at least the National Minimum Wage or National Living Wage , on time and in full at the agreed intervals as set out in the Key Information Document.

Unless you have opted out, you must be auto-enrolled on to a workplace pension scheme if you are eligible, and the deductions for this should appear on your payslip.

Holiday entitlement

You are entitled to paid holidays. Check your holiday entitlement with your employer. Your holiday pay must be deducted from the assignment rate for your job and then paid back to you when you take holiday and claim paid leave.

How you get paid

When you send your timesheet to the recruitment agency, it charges the client.

The recruitment agency then pays the umbrella company the agreed rate. This should be the assignment rate multiplied by the time you have worked.

The umbrella company is responsible for paying you as your employer .

Some umbrella companies may choose to pay the National Minimum Wage rate for all hours worked and then make up your full rate with an additional payment, like a bonus. You must still pay tax on this additional payment and your payslip must show this and all the hours you’ve worked.

Understanding how your gross pay is calculated

You have a right to a payslip that shows your pay.

You may also receive a ‘reconciliation statement’ from the umbrella company which shows you how your gross pay is worked out from the assignment rate.

How an umbrella company works out your gross pay from the assignment rate

The recruitment agency pays the umbrella company the assignment rate, then the umbrella company makes several deductions to work out your gross pay.

The reconciliation statement shows the breakdown of deductions. You should normally see the following deductions on the statement:

• umbrella company operating costs (sometimes called ‘margin’)
• employer National Insurance contribution
• employer workplace pension contribution
• holiday pay
• Apprenticeship Levy (if applicable)

The amount after these deductions have been taken off is your gross pay.

If you do not understand the deductions, or if you are not given a breakdown of them, you should speak to your umbrella company.

Checking your payslip

Your umbrella company will deduct the following from your gross pay:

• employee National Insurance contributions
• employee workplace pension contribution
• student loan repayments (if applicable)
• other deductions that you have agreed to or are legally required to pay

Your pay after these deductions is your take home pay (also known as ‘net pay’).

The National Insurance and pension contributions taken off your gross pay should always be employee contributions, not employer.

If you have issues with your pay, you should speak to your umbrella company first to try to sort out the problem.

If you think deductions for Income Tax and National Insurance from your gross pay are incorrect, you can estimate your Income Tax for the current year .

You can check what to look for on your payslips to see what a payslip should look like.

If your pay is not what you expected

If you have been promised higher pay by your umbrella company.

You are responsible for paying the correct amount of tax and National Insurance, even if you are employed.

Some umbrella companies promote tax avoidance which involves bending the rules of the tax system to pay less tax.

What to look out for

Your umbrella company could be involving you in a tax avoidance scheme if you get:

• a separate payment which you are told is not taxable, such as a loan
• more money paid into your bank account than is shown on your payslip
• a payment from someone other than your umbrella company, which has not been taxed
• asked to sign another agreement in addition to your employment contract

Check what to look for on your payslips and the tax avoidance arrangements used by some umbrella companies .

If you’re concerned you may be involved in tax avoidance

If the umbrella company makes you an offer that sounds too good to be true, take time to consider it and ask for full details. Read personal stories from those who have been caught up in tax avoidance schemes .

You can check if you may be involved in a tax avoidance scheme by using the check if you are at risk of tax avoidance tool . This will tell you how to report the umbrella company and get help to sort out your tax.

You can contact HMRC for help to get out of a tax avoidance scheme and put your tax affairs right.

Ways to protect yourself

Make sure you have access to your payslips, review them when you receive them and keep copies for reference.

Look for signs that your umbrella company might be operating fraudulently as this can have an impact on you.

Signs of fraudulent activity such as mini-umbrella company fraud can include frequent changes to your umbrella company that you have not asked for. You may be able to spot this if your umbrella company’s name or its PAYE reference number is on your payslips and they often change. Frequent changes in employer can affect your employment history and ability to secure loans such as a mortgage.

You should check that the umbrella company is correctly paying your Income Tax and National Insurance contributions, pension contributions and any student loan repayments. Check the deduction amounts on your payslip match the amounts shown in your:

• personal tax account
• student loan repayment account
• pension accounts

You can check your personal tax account online or download the HMRC app .

If an umbrella company says they are accredited or approved by another organisation check with the accrediting body to make sure.

Get help with your pay and rights

You should discuss your pay and employment rights with your umbrella company first.

If you still have concerns after this you can contact:

• Acas (Advisory, Conciliation and Arbitration Service)
• Citizens Advice (‘Contact us’ page)
• your trade union representative

Acas provide free and impartial advice to employers, employees and their representatives on their rights and obligations.

Report concerns

You can  report tax fraud and avoidance by a person or business to HMRC online  or call the HMRC fraud hotline.

You can  report concerns about pay and work rights  including National Minimum Wage, employment agencies, gang masters, or working hours.

Added information on checking to see if you have paid the correct amount of tax and National Insurance, and protecting yourself when working through an umbrella company.

Guidance about who is responsible for paying you in the 'How you get paid' section has been updated, and the 'Checking your payslip' 'section has been updated to mention the umbrella company will make deductions that you are legally required to pay from your gross pay.

This guidance has been updated to show how umbrella company workers are engaged. It has new sections to help workers understand their pay and employment rights and check that their tax and National Insurance is correct.

The section 'Check how you're being paid' has been added.

A link to 'Check your payslip if you work through an umbrella company' has been added to the 'If you think you are using an avoidance scheme' section.

First published.

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Internship report: The impact of Credit Risk Management on banks profitability: A Study on Basic Bank Limited

2020, The impact of Credit Risk Management on banks profitability: A Study on Basic Bank Limited

Credit risk is one of the most vital risks for any commercial bank. Credit risk arises from the failure of the borrower to pay the installments of the loan regularly. It may arise from either an inability or an unwillingness to perform in the pre-commitment contracted manner. The real risk from credit is the deviation of portfolio performance from its expected value. The credit risk of a bank is also effect the book value of a bank. The more credit of a particular is in risk, the more probability of a bank to be insolvent. Globally, more than 50% of total risk elements in Banks and Financial Institution (FI) s are credit risk alone. Thus managing credit risk for efficient management of a FI has gradually become the most crucial task. Credit risk management encompasses identification, measurement, matching mitigations, monitoring and control of the credit risk exposures. In my whole report, I was working on the credit risk Management of BASIC Bank Limited. I have collected last Ten-year financial data of BBL about credit risk management. In my analysis I have showed a comprehensive overview about CRM in different phase of my report. First, I have showed the importance, advantage, challenges and process of CRM. Then I have described about the CRM practice and performance of BBL. Finally, I analyze the impact of CRM on banks financial performance. I have used Ms Excel to analyze the data. I have also used SPSS software to compare relationship between CRM and banks profitability. After analysis and discussion, I have identified the summary of my research’s findings. I have also given some recommendations about CRM for the company. After analyzing the financial data, I like to conclude that BBL is one of the most promising banks in our country. According to its CRM performance, the level credit risk of BBL is in moderate level. However, it has the ability to reduce the credit risk possibility and keep it in lower level.

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