Group risk systems and controls requirements
Group risk systems and controls requirements

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Group risk systems and controls requirements
  • Purpose
  • Principles for business
  • Application
  • The meaning of group
  • The general rules
  • Financial conglomerates
  • CRR firms and non-CRR firms that are parent financial holding companies in a Member State
  • The FCA powers of direction

BREXIT: 11pm (GMT) on 31 December 2020 (‘IP completion day’) marked the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. Following IP completion day, key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

Purpose

SYSC 12 in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) in the Financial Conduct Authority (FCA) Handbook sets out how the systems and control requirements apply when a firm is part of a group, requiring them to assess the potential impact of risks arising from other parts of the group as well as from its own activities. Dual regulated firms should also take note of the parallel rules in the following Parts of the Prudential Regulation Authority (PRA) Rulebook:

  1. Group Risk Systems (which applies to CRR firms), and

  2. Conditions Governing Business— 3 Risk Management (as applied by Group Supervision—17 Risk Management and Internal Control) (which applies to UK Solvency II firms)

In this Practice Note, links to the rules in SYSC 12 are accompanied by links to the corresponding provisions in the PRA Rulebook.

For high-level guidance on how to locate the PRA Rulebook provisions which correspond to the various Chapters of

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