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

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 SYSC, see Practice Note: Senior management arrangements, systems and controls—FCA and PRA checklist, which contains a map of: the requirements of SYSC, the corresponding requirements of the PRA as set out in the PRA Rulebook and in PRA Supervisory Statements, and the entities to which the FCA and PRA senior management arrangements, systems and controls requirements apply.

Where SYSC 12 provisions implement specific provisions of EU law, this is noted in SYSC and

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