Client Money, Custody and CASS: What Fractional Platforms Must Get Right

The FCA client money and custody framework (CASS) sets standards for segregation, reconciliation and recordkeeping where firms hold or control client assets or cash. For platforms offering fractional interests in property or renewable projects, two different regimes can apply: client money rules for cash awaiting investment or withdrawal, and custody arrangements for assets or financial instruments representing ownership. Proper segregation reduces the risk that platform creditors can access investor money if the firm fails. Custody can be achieved by qualified third‑party custodians, trustees, or, where appropriate, nominee arrangements, but each model carries different recovery pathways and operational complexity. Platforms must maintain accurate, timely reconciliations and clear contractual lines about who bears custody risk. Where instruments are held electronically — including tokenised shares — the FCA expects firms to maintain robust systems to prevent loss, demonstrate ownership and enable asset transfer. Operational controls, incident response plans and disclosure about whether assets are pooled or separately identified are part of the protections investors should examine. Independent audits and periodic reporting provide additional scrutiny, though they are not a guarantee against operational failure. For retail investors considering fractional holdings, the practical takeaway is to read platform material on how cash and securities are held, which legal mechanisms protect those holdings, and what happens on insolvency. Clear arrangements and reputable custodians materially change the recovery landscape compared with holding balances on an unsegregated platform.