Altus Business Systems is warning that many third party administrators and distributors may not be adequately prepared for the changes to the CASS rules being introduced in just over six months’ time.
In its recent policy statement PS 14/9, the FCA introduces the concept of the ‘responsible third party’ which increases the accountability of third party providers in producing data in a timely and efficient manner to administrators in order to allow them to conduct reconciliations within the requirements of the new rules. The regulator has encouraged platforms and other administration firms to formally report third parties if delays with complying with the new changes are caused as a result of inadequate data systems or processes.
Many platforms are therefore becoming increasingly conscious of costs as they are aware that they will still be responsible for all the associated costs involved with any issues in data reconciliations, even if they are able to prove that the fault lies with the third party provider.
However, although platforms will be initially accountable for these costs, once the breaks in question have been reconciled, the provider can then try to claim compensation for the costs incurred on behalf of the third party.
Under the new 1st June CASS rules, the time to do this is also reducing from 25 working days to ‘monthly’ so there is now an increased pressure on platforms to ensure they are working as efficiently as possible with third party providers.
William Watling, Product Marketing Director at Altus says: ‘If third parties continue to cause delays because their systems aren’t able to provide data electronically in a timely manner, then it is likely that many providers will invoke action for recompense in today’s cost conscious environment.
‘The FCA has now not only encouraged platforms and other administration firms to point the finger if a third party hinders them from meeting the new CASS obligation starting on 1st June 2015, but has now made it a requirement to report them for failing to comply with the new rules.
‘Therefore, if you’re a TA or fund manager responsible for providing data to distributors, there could be no better time than the present to look at how efficient your data services are. Likewise, if you’re a distributor responsible for doing the ‘recs’, are you sure your systems are ready for 1 June?’