Financial Conduct Authority (FCA) UK Regulation Sample Exam

An exemption from the FCA's CASS rules is granted in connection with:

1. Investment Management Companies

2. Insurance Providers

3. ICVCs

4. Retail Banks

The correct answer is: ICVCs

The exemption from the FCA's Client Assets Sourcebook (CASS) rules is particularly relevant to investment companies, specifically Invesment Company with Variable Capital (ICVCs). This category of investment company operates under specific regulations that allow them to safeguard client assets differently compared to traditional investment managers or other financial institutions. ICVCs are structured to provide investors with a pooled vehicle for mutual fund investments. The unique operational structure of ICVCs enables them to directly hold the assets belonging to investors without the same custodial arrangements that are typically required under CASS rules. This means that they can maintain compliance with the investment protection objectives of the FCA without being subjected to the same stringent requirements imposed on other financial services firms. In contrast, investment management companies, insurance providers, and retail banks are generally required to adhere to stricter CASS rules, which focus on the safeguarding of client assets and ensuring proper handling of any client money or property. By design, these entities operate under frameworks that necessitate a comprehensive approach to asset management and client protection, unlike the specific exemptions provided for ICVCs.