CASS Anatomy: Difference between revisions

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 ===[[Client money]]===
-Generally, there are two reasons you might pay money to someone else:
+Generally, there are two reasons you might pay money to someone else under a contract:
-*'''The general case''': because you owe it to that person (that is - they’re obliged to take it from you) under a contract. In some cases (for example a {{tag|CSA}} or even a loan) your payment to them might give rise to an obligation on them to pay some money back to you in the future. But you are exposed to the payee's credit risk in the mean time: you are their '''creditor'''. This general case does not involve client money. I suppose you could say this is “title transfer” of cash, but that is over-specifying because title to cash, by definition, passes by delivery.
+====The general case====
-*'''A special case''': because you want that person to look after your money for you. Here, you don't owe them anything, and the only contract you have with the person arises because they've agreed to look after the money for you. This special case is a sort of safekeeping: it is a regulated activity. In the UK it is regulated by the {{tag|FCA}} under the [[Client Asset Sourcebook]] (fonldly known as the {{tag|CASS}} rules).
+''Because you are obliged to pay it to him under the contract.''
+*In some cases (for example a {{tag|CSA}} or even a [[loan]]) the payee might in turn have an obligation to pay some money back to you. But you are exposed to the payee's credit risk in the mean time: you are his '''creditor'''.
+*This general case does not involve handling [[client money]].
+*You could say this is “title transfer” of cash, but you don't need to, because cash is special: title to cash, by definition, passes by delivery.
-Now this special case creates a metaphysical problem, because when you look after something, you're not meant to take ownership of it. You're just a custodian. But you ''can't'' "just look after" someone else's cash: just by holding it, you own it. This necessitates two things:
+====The special case===
-*'''First''': A person agreeing to look after your money can't keep it: they have to pass it on to someone else to look after 0  and therefore
+''Because you want him to look after it for you under the contract.''
-*'''Second''': Since - hang on - that creates an infinite regression doesn't it? - there needs to be one class of people who ''are'' allowed to look after your money by keeping it as their own money but promising to pay it back when you want it. And so there are: This special class people are called ''banks''.
+*Here, you don't owe the payee anything, and the only contract you have with the person arises because he's agreed to look after the money for you.
+*This special case is a sort of safekeeping: it is a regulated activity. In the UK it is regulated by the {{tag|FCA}} under the [[Client Asset Sourcebook]] (fonldly known as the {{tag|CASS}} rules).
-So: ''anyone'' can borrow some money off you; only someone permitted to do so under the [[CASS rules]] can look after your money for you.
+*Now this special case creates a metaphysical problem, because when you look after something, you're not meant to take ownership of it. You're just a custodian. But as noted above, you ''can't'' "just look after" someone else's cash: Casg is special. Just by holding it, you own it.
+*This necessitates two things:
-In the special case there is no debtor/creditor relationship with the payee as long as the payee promptly transfers the cash on to a third party bank with whom the payer does have a debtor/creditor relationship. Note this is also title transfer (you can’t not title transfer cash), but within a prescribed period, the transfer goes to a third party bank.
+**''First'': A person agreeing to look after your money can't keep it: they have to pass it on to someone else to look after 0  and therefore
+**''Second'': Since - hang on - that creates an infinite regression doesn't it? - there needs to be one class of special people who ''are'' allowed to look after your money by keeping it for themselves but promising to pay it back when you want it.
-The banking exemption to the special case is there precisely because title cash does necessarily transfer by delivery, and someone has to hold the cash, and that someone must hold it as debtor to the original payer. Banks are especially suited to be able to do that, which is why they’re granted the exemption. A bank, therefore, is the person that converts the special case (looking after the cash) into the general case (owing the cash).
+**And so, lo and behold there are: This special class of people are ''banks''.
+**You are exposed to the credit risk of banks, but as we all now know banks are carefully regulated, well capitalised, immune from contagion and entirely appropriate places to look after your money.
+====In a {{nutshell}} then?====
+''Anyone'' can borrow some money off you; only someone special can hold your money for you. Everyone else has to look after your money by giving it to a bank to hold for you in your name. In that case there is no debtor/creditor relationship with the payee as long as the payee promptly transfers the cash on to a bank with whom you will have a debtor/creditor relationship. Note this is also title transfer (you can’t {{isdaprov|not}} title transfer cash), but within a prescribed period, the transfer goes to a third party bank. (if the intermediary were to go insolvent in the mean time it's tough luck).
 ===Banks===