Related provisions for IFPRU 4.12.30

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REC 2.5.1UKRP

Schedule to the Recognition Requirements Regulations, paragraph 3

2(1)

The [UK RIE] must ensure that the systems and controls used in the performance of its [relevant functions] are adequate, and appropriate for the scale and nature of its business.

(2)

Sub-paragraph (1) applies in particular to systems and controls concerning -

(a)

the transmission of information;

(b)

the assessment, mitigation and management of risks to the performance of the [UK RIE'srelevant functions];

(c)

the effecting and monitoring of transactions on the [UK RIE];

(ca)

the technical operation of the [UK RIE], including contingency arrangements for disruption to its facilities;

(d)

the operation of the arrangements mentioned in paragraph 4(2)(d); and

(e)

(where relevant) the safeguarding and administration of assets belonging to users of the [UK RIE's] facilities.
REC 2.5.4GRP
The following paragraphs set out other matters to which the FCA3 may have regard in assessing the systems and controls used for the transmission of information, risk management, the effecting and monitoring of transactions, the operation of settlement arrangements (the matters covered in paragraph 4(2)(d) of the Schedule to the Recognition Requirements Regulations) and the safeguarding and administration of assets .33
REC 2.5.6GRP
In assessing a UK recognised body's systems and controls for assessing and managing risk, the FCA3 may also have regard to the extent to which these systems and controls enable the UK recognised body to:3(1) identify all the general, operational, legal and market risks wherever they arise in its activities;(2) measure and control the different types of risk;(3) allocate responsibility for risk management to persons with appropriate knowledge and expertise; and(4) provide sufficient,
CONC 2.10.12GRP
Where a firm understands, or reasonably suspects, a customer has or may have a mental capacity limitation the firm should use its business practices and procedures to: (1) assist the customer, where possible, to make an informed borrowing decision; and (2) ensure its lending decision is informed and responsible in the circumstances and mitigates the potential risks to the customer.[Note: paragraphs 4.3 and 4.5 of MCG]
CONC 2.10.18GRP
Where a firm understands, or reasonably suspects, a customer has or may have a mental capacity limitation it should apply a high level of scrutiny to the customer's application for credit, in order to mitigate the risk of the customer entering into unsustainable borrowing (see CONC 5.2 and CONC 5.3). [Note: paragraphs 4.32 and 4.33 of MCG]
CONC 2.10.19GRP
(1) A firm should balance the risk of a customer taking on unsustainable borrowing against inappropriately or unnecessarily denying credit to a customer. (2) Where a firm understands or reasonably suspects a customer has or may have a mental capacity limitation, it should undertake an appropriate and effective creditworthiness assessment or assessment required by CONC 5.2.2R (1) and it would be appropriate not to place over-reliance on information provided by the customer for
BIPRU 4.4.9RRP
A firm with portfolios concentrated in a particular market segment and range of default risk must have enough obligor grades within that range to avoid undue concentrations of obligors in a particular grade. Significant concentrations within a single grade must be supported by convincing empirical evidence that the obligor grade covers a reasonably narrow PD band and that the default risk posed by all obligors in the grade falls within that band.[Note:BCD Annex VII Part 4 point
BIPRU 4.4.13RRP
Separate exposures to the same obligor must be assigned to the same obligor grade, irrespective of any differences in the nature of each specific transaction. Exceptions, where separate exposures are allowed to result in multiple grades for the same obligor are:(1) country transfer risk, this being dependent on whether the exposures are denominated in local or foreign currency;(2) where the treatment of associated guarantees to an exposure may be reflected in an adjusted assignment
BIPRU 4.4.39RRP
For all off-balance sheet items other than mentioned in BIPRU 4.4.37 R, BIPRU 4.4.45 R, BIPRU 4.4.71 R - BIPRU 4.4.78 R, BIPRU 4.6.44 R, BIPRU 4.8.28 R and BIPRU 4.8.29 R, the exposure value must be the following percentage of its value:(1) 100% if it is a full risk item;(2) 50% if it is a medium risk item;(3) 20% if it is a medium/low risk item; and(4) 0% if it is a low risk item.For the purposes of this rule the off-balance sheet items must be assigned to risk categories as
BIPRU 4.4.57RRP
Subject to BIPRU 4.4.59 R to BIPRU 4.4.60 R, BIPRU 4.5.6 R, BIPRU 4.5.8 R - BIPRU 4.5.10 R (Risk weights for specialised lending), BIPRU 4.8.16 R, BIPRU 4.8.17 R (Risk weights for corporate exposure purchased receivables) and BIPRU 4.9.3 R (Securitisation: provision of credit protection), risk weighted exposure amounts must be calculated according to the formulae in the table in BIPRU 4.4.58 R and the adjustment formula in BIPRU 4.4.79 R (Double default).[Note:BCD Annex VII Part
MCOB 9.4.33RRP
The illustration must include under the heading "Risks - important things you must consider" statements and warnings on the following:(1) a brief statement of the specific circumstances in which the mortgage lender is able to repossess the property;(2) a statement of how the mortgage lender will treat any negative equity arising during the life of the lifetime mortgage7 and at the time the amount borrowed under the lifetime mortgage7 is due to be repaid in full;77(3) a statement
MCOB 9.4.35RRP
Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:(1) for drawdown mortgages where there is a monthly (or such other frequency as may apply) cash sum payable, a statement that inflation can erode the value of the cash sum over time; (2) where:(a) the lifetime mortgage7 is linked to an investment; and7(b) the payments required on the lifetime mortgage7 will be deducted from the income from the investment;
MCOB 9.4.145RRP
8The illustration must include under the heading "Risks - important things you must consider" brief statements and warnings on all material risks involving a home reversion plan, including:(1) prominently at the beginning of the section: "A home reversion is a complex property transaction. You should seek legal advice to ensure that you fully understand all of the implications for you and your home and for anyone who might otherwise inherit the property.";(2) the effect of the
MCOB 9.4.147RRP
8Under the heading "Risks - important things you must consider" the illustration must also include the following if they apply:(1) for an instalment reversion plan, a statement that if the customer dies in the early years of the plan, income payments will cease and therefore the full expected benefits of the plan will not be obtained;(2) (a) for an instalment reversion plan where there is a regular cash sum payable; and(b) where:(i) the home reversion plan is linked to an investment;
BIPRU 5.4.57RRP
The volatility estimates must be used in the day-to-day risk management process of a firm including in relation to its internal exposure limits.[Note:BCD Annex VIII Part 3 point 53]
BIPRU 5.4.58RRP
If the liquidation period used by a firm in its day-to-day risk management process is longer than that set out in BIPRU 5.4 for the type of transaction in question, the firm's volatility adjustments must be scaled up in accordance with the square root of time formula set out in BIPRU 5.4.52 R.[Note: BCD Annex VIII Part 3 point 54]
BIPRU 5.4.59RRP
A firm must have established procedures for monitoring and ensuring compliance with a documented set of policies and controls for the operation of its system for the estimation of volatility adjustments and for the integration of such estimations into its risk management process.[Note:BCD Annex VIII Part 3 point 55]
BIPRU 5.4.60RRP
An independent review of a firm's system for the estimation of volatility adjustments must be carried out regularly in the firm's own internal auditing process. A review of the overall system for the estimation of volatility adjustments and for integration of those adjustments into the firm's risk management process must take place at least once a year and must specifically address, at a minimum:(1) the integration of estimated volatility adjustments into daily risk management;(2)
MIPRU 4.2F.8GRP
(1) For the purposes of MIPRU 4.2F.7R (2), a firm may use the FTSE UK gilt 10-year yield index which the Council of Mortgage Lenders makes available to its members. (2) If a firm offers a variable interest rate on a lifetime mortgage, it should calculate an average interest rate in a way which is consistent with the calculation of the discount rate.(3) To determine the projected number of years to maturity of the exposure, a firm may use the standard mortality tables published
MIPRU 4.2F.16GRP
For MIPRU 4.2F.14R (1)(a), the monitoring of property values should be an ongoing part of risk managing and tracking the portfolio. The requirement to monitor property values does not include the physical assessment of each property in the portfolio.
MIPRU 4.2F.49RRP
Exposures in the form of funds that are not past due items, that have been assigned a risk weight of 150% or greater, and for which value adjustments have been established, may be assigned a risk weight of: (1) 100% if value adjustments are no less than 20% of the exposure value gross of value adjustments; or(2) 50%, if value adjustments are no less than 50% of the exposure value gross of value adjustments
BIPRU 1.2.26RRP
A firm must have clearly defined policies and procedures for determining which positions to include in the trading book for the purposes of calculating its capital requirements, consistent with the criteria set out in BIPRU 1.2.3 R to BIPRU 1.2.4 R, BIPRU 1.2.10 R to BIPRU 1.2.11 R, BIPRU 1.1.13 R and BIPRU 1.2.22 R and taking into account the firm's risk management capabilities and practices. Compliance with these policies and procedures must be fully documented and subject to
BIPRU 1.2.27RRP
A firm must have clearly defined policies and procedures for overall management of the trading book. At a minimum these policies and procedures must address:(1) the activities the firm considers to be trading and as constituting part of the trading book for capital requirement purposes;(2) the extent to which a position can be marked-to-market daily by reference to an active, liquid two-way market;(3) for positions that are marked-to-model, the extent to which the firm can:(a)
BIPRU 1.2.33GRP
The trading book policy statement may be prepared on either a consolidated or a solo (or solo-consolidated) basis. It should be prepared on a consolidated basis when a group either manages its trading risk centrally or employs the same risk management techniques in each group member. A trading book policy statement prepared on a consolidated basis should set out how it applies to each firm in the group and should be approved by each such firm'sgoverning body.
IFPRU 4.6.11GRP
The FCA considers that one variable scalar approach, potentially compliant with the four principles in IFPRU 4.6.5 G, could involve:(1) segmenting a portfolio by its underlying drivers of default risk; and(2) estimating separate long-run default rates for each of these segmented pools.
IFPRU 4.6.18GRP
A firm should consider what use it can make of industry information. However, the firm should be seeking to measure the absolute level of, and changes to, its own default risk, rather than changes in default risk relative to the industry. Given the potential for conditions to change across in the market as a whole, a firm should not draw undue comfort from the observation that its default risk is changing in the same way as the industry as a whole. Doing so would not allow it
IFPRU 4.6.33GRP
The FCA expects a firm to assign exposures to the risk weight category for specialised lending exposures based on the criteria set out in the tables in IFPRU 4 Annex 1G(Slotting criteria).
BIPRU 3.7.1RRP
In accordance with BIPRU 3.2.1 R (2) and BIPRU 3.2.2 R, a firm must:(1) assign an off-balance sheet item listed in the table in BIPRU 3.7.2 R to the risk category indicated in column 1 of that table; and(2) determine the exposure value of that item as the percentage of its value for the appropriate risk category as set out in column 3 of the table in BIPRU 3.7.2 R.
BIPRU 3.7.2RRP

This table belongs to BIPRU 3.7.1 R

[Note: BCD Annex II]

Category

Item

Percentage

Full risk

Guarantees having the character of credit substitutes

Credit derivatives

Acceptances

Endorsements on bills not bearing the name of another credit institution

Transactions with recourse

Irrevocable standby letters of credit having the character of credit substitutes

Assets purchased under outright forward purchase agreements

Forward deposits

The unpaid portion of partly-paid shares and securities

Asset sale and repurchase agreements as defined in Article 12(3) and (5) of the Bank Accounts Directive

Other items also carrying full risk

100%

Medium risk

Documentary credits issued and confirmed (see also medium/low risk).

Warranties and indemnities (including tender, performance, customs and tax bonds) and guarantees not having the character of credit substitutes.

Irrevocable standby letters of credit not having the character of credit substitutes.

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of more than one year.

Note issuance facilities (NIFs) and revolving underwriting facilities (RUFs).

50%

Medium/low risk

Documentary credits in which underlying shipment acts as collateral and other self-liquidating transactions.

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) with an original maturity of up to and including one year which may not be cancelled unconditionally at any time without notice or that do not effectively provide for automatic cancellation due to deterioration in a borrower's creditworthiness.

20%

Low risk

Undrawn credit facilities (agreements to lend, purchase securities, provide guarantees or acceptance facilities) which may be cancelled unconditionally at any time without notice, or that do effectively provide for automatic cancellation due to deterioration in a borrower's creditworthiness. Retail credit lines may be considered as unconditionally cancellable if the terms permit the firm to cancel them to the full extent allowable under consumer protection and related legislation.

0%
MIPRU 4.2D.2RRP
A firm must at all times maintain liquidity resources which are adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due.
MIPRU 4.2D.5RRP
The strategies, policies, processes and systems referred to in MIPRU 4.2D.4 R must be proportionate to the nature, scale and complexity of the firm's activities and the risk profile of the firm.
SUP 1A.4.2GRP
These tools may be usefully grouped under four headings:(1) diagnostic: designed to identify, assess and measure risks;(2) monitoring: to track the development of identified risks, wherever these arise;(3) preventative: to limit or reduce identified risks and so prevent them crystallising or increasing; and(4) remedial: to respond to risks when they have crystallised.
SUP 1A.4.3GRP
Tools may serve more than one purpose. For example, supervisory powers can be used to address risks which have materialised or to assist in preventing risks from escalating. In the first instance they are remedial; in the second, preventative.
BIPRU 9.13.2RRP
A firm must calculate a risk weighted exposure amount in respect of the sum of the originators interest and the investors interest.[Note:BCD Annex IX Part 4 point 17]
BIPRU 9.13.9RRP
For an originator subject to the capital requirement in BIPRU 9.13.1 R the total of the risk weighted exposure amounts in respect of its positions in the investors interest (as defined in BIPRU 9.13.4 R or BIPRU 9.13.6 R) and the risk weighted exposure amounts calculated under BIPRU 9.13.1 R must be no greater than the greater of:(1) the risk weighted exposure amounts calculated in respect of its positions in the investors interest (as so defined); and(2) the risk weighted exposure
INSPRU 3.1.61GRP
In selecting the appropriate cover, the firm should ensure that both credit risk, and the risk that the value or yield in the assets will not, in all circumstances, match fluctuations in the relevant index, are within acceptable limits.8
INSPRU 3.1.61ARRP
A pure reinsurer must invest its assets in accordance with the following requirements:(1) the assets must take account of the type of business carried out by the firm, in particular the nature, amount and duration of expected claims payments, in such a way as to secure the sufficiency, liquidity, security, quality, profitability and matching of its investments;(2) the firm must ensure that the assets are diversified and adequately spread and allow the firm to respond adequately
IFPRU 4.2.3RRP
For the purposes of articles 124(2) and 126(2) of the EU CRR, and in addition to the conditions in those regulations, a firm may only treat exposures as fully and completely secured by mortgages on commercial immovable property located in the UK1 in line with article 126 where annual average losses stemming from lending secured by mortgages on commercial property in the UK did not exceed 0.5% of risk-weighted exposure amounts over a representative period. A firm must calculate
IFPRU 4.2.4RRP
For the purpose of this rule, a representative period shall be a time horizon of sufficient length and which includes a mix of good and bad years.
IFPRU 11.2.7RRP
If a firm is not a significant IFPRU firm its recovery plan must include:(1) a summary of the key elements of the recovery plan;(2) information on the governance of the firm, including: (a) how the recovery plan is integrated into the corporate governance of the firm; and (b) the firm's overall risk management framework;(3) a description of the legal and financial structures of the firm, including:(a) the core business lines; and(b) critical functions;(4) recovery options, including:(a)
BIPRU 13.7.6RRP
A firm may treat contractual netting as risk-reducing only under the following conditions:(1) the firm must have a contractual netting agreement with its counterparty which creates a single legal obligation, covering all included transactions, such that, in the event of a counterparty's failure to perform owing to default, bankruptcy, liquidation or any other similar circumstance, the firm would have a claim to receive or an obligation to pay only the net sum of the positive and
BIPRU 13.7.7RRP
If any of the competent authorities concerned is not satisfied that the contractual netting is legally valid under the law of each of the relevant jusrisdictions, the firm must not treat the contractual netting agreement as risk-reducing.[Note: BCD Annex III Part 7 point (b) (part)]
DTR 7.2.5RRP
The corporate governance statement must contain a description of the main features of the issuer's internal control and risk management systems in relation to the financial reporting process.[Note: article 20(1)(c) of the Accounting Directive4]
DTR 7.2.10RRP
Subject to DTR 7.2.11 R, an issuer which is required to prepare a group directors’ report within the meaning of section 415(2) of the Companies Act 2006 must include in that report a description of the main features of the group’s internal control and risk management systems in relation to the financial reporting process for the undertakings included in the consolidation, taken as a whole4. In the event that the issuer presents its own annual report and its consolidated annual
MIPRU 4.2A.9RRP
For the purposes of applying a risk weight, the exposure value must be multiplied by the risk weight determined in accordance with MIPRU 4.2A.10 R, MIPRU 4.2A.10A R, MIPRU 4.2A.10B R, 3MIPRU 4.2A.11 R, MIPRU 4.2A.12 R or 3MIPRU 4.2A.17 R, unless it is deducted from capital resources under MIPRU 4.4.4 R or MIPRU 4.2BA3.
MIPRU 4.2A.17ARRP
(1) 3The application of risk weights must be based on the exposureclass to which the exposure is assigned and, to the extent specified in MIPRU 4.2BA and MIPRU 4.2F (Exposures and risk weights), its credit quality.(2) Credit quality must be determined by reference to solicited credit assessments of eligible ECAIs where these are available, in accordance with MIPRU 4.2E (Use of external credit assessments).
SUP 5.3.1GRP
The appointment of a skilled person to produce a report under section 166 of the Act (Reports by skilled persons) is one of the appropriate regulator's6 regulatory tools. The tool may be used:6(1) for diagnostic purposes, to identify, assess and measure risks; (2) for monitoring purposes, to track the development of identified risks, wherever these arise;(3) in the context of preventative action, to limit or reduce identified risks and so prevent them from crystallising or increasing;
SUP 5.3.2GRP
The decision by the appropriate regulator6 to require a report by a skilled person under section 166 of the Act (Reports by skilled persons) 6will normally be prompted by a specific requirement for information, analysis of information, assessment of a situation,4 expert advice or recommendations or by a decision to seek assurance in relation to a regulatory return4. It may4 be part of the risk mitigation programme applicable to a firm, or the result of an event or development
SUP 10A.8.1RRP
The systems and controls function is the function of acting in the capacity of an employee of the firm with responsibility for reporting to the governing body of a firm, or the audit committee (or its equivalent) in relation to:(1) its financial affairs;(2) setting and controlling its risk exposure (see SYSC 3.2.10 G and SYSC 7.1.6 R);(3) adherence to internal systems and controls, procedures and policies (see SYSC 3.2.16 G and SYSC 6.2).
SUP 10A.8.5GRP
1For a full-scope UK AIFM, the requirement to have an employee responsible for reporting to the governing body of the firm or the audit committee for matters in SUP 10A.8.1R (2) and SUP 10A.8.1R (3) is derived from the AIFMD level 2 regulation, which imposes obligations on such firms to have a permanent risk management function and, where appropriate and proportionate for their business, an internal audit function.