CASS 15.7 Acknowledgement letters

The main purposes of an acknowledgement letter are:

1. (1) to put third parties on notice of a safeguarding institution's client's interests in relevant funds or relevant assets that have been deposited or invested with them;

2. (2) to ensure that a relevant funds bank account or relevant assets account has been opened in accordance and in compliance with the relevant funds regime, and is distinguished from any account containing funds or assets that are not relevant funds or relevant assets; and

3. (3) to ensure that a third party understands and agrees that it will not have any recourse or right against funds or assets standing to the credit of a relevant funds bank account or relevant assets account in respect of any liability of the safeguarding institution to the third party (or a person connected to the third party), except to the extent provided for by the Electronic Money Regulations or the Payment Services Regulations, as the case may be.

CASS 15.7.3R does not apply to the type of relevant funds bank account specified in regulation 21(4A) of the Electronic Money Regulations or regulation 23(9) of the Payment Services Regulations (Bank of England settlement accounts). 

For each relevant funds bank account, a safeguarding institution must complete and sign a safeguarding account acknowledgement letter clearly identifying the relevant funds bank account and send it to the approved bank with which the relevant funds bank account is, or will be, opened, requesting the bank to acknowledge and agree to the terms of the letter by countersigning it and returning it to the safeguarding institution.

For each relevant assets account, a safeguarding institution must complete and sign a safeguarding account acknowledgement letter clearly identifying the relevant assets account and send it to the firm with which the relevant assets account is, or will be, opened, requesting the firm to acknowledge and agree to the terms of the letter by countersigning it.

In drafting acknowledgement letters under CASS 15.7, a safeguarding institution must use the template in CASS 15 Annex 1.

When completing an acknowledgement letter, a safeguarding institution:

1. (1) must not amend any of the acknowledgement letter fixed text;

2. (2) subject to (3), must ensure the acknowledgement letter variable text is removed, included or amended as appropriate; and 

3. (3) must not amend any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text.

CASS 15 Annex 2 contains guidance on using the template for acknowledgement letters, including guidance on when and how safeguarding institutions should amend the acknowledgement letter variable text that is in square brackets.

1. (1) If, on countersigning and returning the acknowledgement letter to a safeguarding institution, the relevant person has also made amendments to:

2. (a) any of the acknowledgement letter fixed text; or 

3. (b) any of the acknowledgement letter variable text in a way that would alter or otherwise change the meaning of the acknowledgement letter fixed text,

4.      the acknowledgement letter will have been inappropriately redrafted and no longer comply with CASS 15.7.6R.

5. (2) Amendments made to the acknowledgement letter variable text in the acknowledgement letter returned to a safeguarding institution by the relevant person will not have the result that the letter has been inappropriately redrafted if those amendments:

6. (a) do not affect the meaning of the acknowledgement letter fixed text;

7. (b) have been specifically agreed with the safeguarding institution; and 

8. (c) do not cause the acknowledgement letter to be inaccurate.

A safeguarding institution must use reasonable endeavours to ensure that any individual that has countersigned an acknowledgement letter that has been returned to the safeguarding institution was authorised to countersign the letter on behalf of the relevant person. 

A safeguarding institution must retain each countersigned acknowledgement letter it receives from the date of receipt until the expiry of a period of 5 years starting on the date on which the last account to which the acknowledgement letter relates is closed. 

A safeguarding institution must also retain any other documentation or evidence it believes is necessary to demonstrate that it has complied with each of the applicable requirements in this section (such as any evidence it has obtained to ensure that the individual that has countersigned an acknowledgement letter that has been returned to the safeguarding institution was authorised to countersign the letter on behalf of the relevant person). 

A safeguarding institution must periodically (at least annually, and whenever it becomes aware that something referred to in an acknowledgement letter has changed) review each of its countersigned acknowledgement letters to ensure that they remain accurate.

Whenever a safeguarding institution finds a countersigned acknowledgement letter contains an inaccuracy, the safeguarding institution must promptly draw up a replacement acknowledgement letter and request that the new acknowledgement letter is duly countersigned and returned by the relevant person.

Under CASS 15.7.13R, a safeguarding institution should draw up a replacement acknowledgement letter whenever:

1. (1) there has been a change in any of the parties’ names or addresses or a change in any of the details of the relevant account(s) as set out in the letter; or

2. (2) it becomes aware of an error or misspelling in the letter.

If a safeguarding institution'srelevant funds bank account or relevant assets account is transferred to another person, the safeguarding institution must promptly draw up a new acknowledgement letter under CASS 15.7 and request that the new acknowledgement letter is duly countersigned and returned by the relevant person.