1. (1)

   1SYSC 20 applies to:

   1. (a)

      a BIPRU firm

      2

      which is:

      2
      1. (i) 2

         a bank; or

      2. (ii) 2

         a building society; or

      3. (iii) 2

         a BIPRU investment firm which meets any of the criteria set out in (2) on an individual basis, or in (3) on a consolidated basis; and

   2. (b)

      an insurer unless it is:

      1. (i)

         a non-directive friendly society; or

      2. (ii)

         a Swiss general insurer; or

      3. (iii)

         an EEA-deposit insurer; or

      4. (iv)

         an incoming EEA firm; or

      5. (v)

         an incoming Treaty firm.

2. (2)

   Subject to (4), SYSC 20 applies to2 a BIPRU investment firm if:

   22
   1. (a)

      it has assets under management or administration of at least 2£10 billion (or the equivalent amount in foreign currency); or

      22
   2. (b)

      the total annual fee and commission income arising from its regulated activities isat least2 £250 million (or the equivalent amount in foreign currency); or

      2
   3. (c)

      it has assets or2 liabilities of at least2 £2 billion (or the equivalent amount in foreign currency).

      22
3. (3)

   Subject to (4), where2 all of the BIPRU investment firms within the same UK consolidation group or non-EEA sub-group, taken together as if they were one firm, meet any of the criteria in (2),22SYSC 20 applies to each of those BIPRU investment firms as if it individually met the inclusion criteria in (2).2

   2
4. (4)

   Any BIPRU investment firm which is included within the scope of SYSC 202 in accordance with (2) or2 (3) in any given year will continue to be subject to SYSC 20 for the following two years irrespective of whether or not 2it continues to meet the inclusion criteria2 in any of those subsequent years.

   222

1. (1) 4

   SYSC 20 applies to:

   1. (a)

      an IFPRU investment firm; and

   2. (b)

      a BIPRU firm which meets any of the criteria in (2) on an individual basis, or in (3) on a consolidated basis.

2. (2)

   Subject to (4), SYSC 20 applies to a BIPRU firm if:

   1. (a)

      it has assets under management or administration of at least £10 billion (or the equivalent amount in foreign currency); or

   2. (b)

      the total annual fee and commission arising from regulated activities is at least £250 million (or the equivalent amount in foreign currency); or

   3. (c)

      it has assets or liabilities of at least £2 billion (or the equivalent amount in foreign currency).

3. (3)

   Subject to (4), where all of the BIPRU firms within the same UK consolidation group or non-EEA sub-group, taken together, as if they were one firm, meet any of the criteria in (2), SYSC 20 applies to each of those BIPRU firms as if it individually met the criteria in (2).

4. (4)

   Any BIPRU firm which is included within the scope of SYSC 20 in accordance with (2) or (3) in any given year will continue to be subject to SYSC 20 for the following two years, irrespective of whether or not it continues to meet the inclusion criteria in any of those subsequent years.

As part of its business planning and risk management obligations under SYSC, a firm must reverse stress test its business plan; that is, it must carry out stress tests and scenario analyses that test its business plan to failure. To that end, the firm must:

1. (1)

   identify a range of adverse circumstances which would cause its business plan to become unviable and assess the likelihood that such events could crystallise; and

2. (2)

   where those tests reveal a risk of business failure that is unacceptably high when considered against the firm's risk appetite or tolerance, adopt effective arrangements, processes, systems or other measures to prevent or mitigate that risk.

Where the firm is a member of:

1. (1)

   an insurance group, in respect of which it is required to maintain group capital;

2. (2)

   a UK consolidation group; or

3. (3)

   a non-EEA sub-group;

it must conduct the reverse stress test on a solo basis as well as on a consolidated basis in relation to the insurance group, the UK consolidation group or the non-EEA sub-group, as the case may be.

The design and results of a firm's reverse stress test must be documented and reviewed and approved at least annually by the firm's senior management or governing body. A firm must update its reverse stress test more frequently if it is appropriate to do so in the light of substantial changes in the market or in macroeconomic conditions.