PS 14/09 – Eating the Elephant

You might have thought, with all the debate and months of consultation which went into the client money and assets changes in PS14/09, that the implementation phase would be straightforward. Surely firms have analysed this enormous body of changes into its constituent parts and are now clear on what they need to do and when? Unfortunately not. There are still numerous areas of difficulty and uncertainty to be conquered. Even without those, there is a significant amount of work to do between now and December 2014, let alone June 2015. We have grouped these changes into no less than 40 different headings, ranging from terms and conditions changes to the treatment of postdated cheques.

So if it is large and has significant grey areas it must be… an elephant! And we all know how to eat an elephant – one bite at a time.

We recommend the following approach:

Bring it all together

Bringing together a project involving the key individuals who are identified in your CASS Resolution Pack as vital to the operation of client money and assets operations and management would be a good start. The first task will be to educate them on the changes. The second task is then:

Chew it over

Use this group, supplemented if necessary by outside help, to analyse and identify which of the headings are applicable to your business and what impacts, at high level, are likely to need management and implementation over the next few months.

Decide where to start

It is essential, with such a large task list, to prioritise. The changes which come in soonest are not necessarily those which need to come to the top of your list. The amount of work which is required to achieve the applicable deadline needs to be considered. For example, anything which requires systems changes, such as changes to reconciliation processes or DVP exemptions will need a long lead time.

Consider low-hanging fruit

We’re not sure that this makes a good accompaniment to elephant, but low-hanging fruit is definitely available in the form of changes which can be readily implemented in advance of the deadlines. The FCA has confirmed that changes made ahead of rules set out in the policy statement will not bring a firm into breach of CASS. For example, you may be able to persuade your bank to sign the new acknowledgement letters for bank accounts (though we hear that some are reluctant to embark on this just yet). You may even decide to make changes to some of your reconciliations; perhaps some of the legacy processes are performed manually and would be easier to change early.

Keep the momentum going

After applying the normal project management processes to allocate task responsibilities and making plans which get you to the dates required, the first bite should be relatively straightforward. However, ongoing management will be required not only to ensure that goals can be achieved but also to keep the project aligned with any clarifications on changes which emerge over the next few weeks and months of dialogue, as the industry tries to digest the reality of what is required.

In summary, it will take a long time and a lot of effort to eat this particular elephant but approaching the task with respect for its scale and importance while breaking down the requirements into small enough portions should enable you to remain compliant as these changes take effect.