Related provisions for BIPRU 7.8.4
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A firm must not apply any advanced prudential calculation approach for the purposes of this chapter unless it has an advanced prudential calculation approach permission and that advanced prudential calculation approach permission requires the firm to use that advanced prudential calculation approach for those purposes.
Even if a firm has an advanced prudential calculation approach permission that allows it to use an advanced prudential calculation approach for the purposes of this chapter, the firm may not use the requirements of another state or territory to the extent they provide for that advanced prudential calculation approach. 4222
The internal control mechanisms referred to in SYSC 12.1.8 R must include:(1) mechanisms that are adequate for the purpose of producing any data and information which would be relevant for the purpose of monitoring compliance with any prudential requirements (including any reporting requirements and any requirements relating to capital adequacy, solvency, systems and controls and large exposures):(a) to which the firm is subject with respect to its membership of a group; or(b)
If this rule applies under SYSC 12.1.14 R to a firm, the firm must:(1) comply with SYSC 12.1.8R (2) in relation to any UK consolidation group18of which it is a member, as well as in relation to its group; and17(2) ensure that the risk management processes and internal control mechanisms at the level of any consolidation group18of which it is a member comply with the obligations set out in the following provisions on a consolidated (or sub-consolidated) basis:17(a) SYSC 4.1.1
In some cases the management of the systems and controls used to address the risks described in SYSC 12.1.8R (1) may be organised on a group-wide basis. If the firm is not carrying out those functions itself, it should delegate them to the group members that are carrying them out. However, this does not relieve the firm of responsibility for complying with its obligations under SYSC 12.1.8R (1). A firm cannot absolve itself of such a responsibility by claiming that any breach
SYSC 12.1.8R (1) deals with the systems and controls that a firm should have in respect of the exposure it has to the rest of the group. On the other hand, the purpose of SYSC 12.1.8R (2) and the rules in this section that amplify it is to require groups to have adequate systems and controls. However a group is not a single legal entity on which obligations can be imposed. Therefore the obligations have to be placed on individual firms. The purpose of imposing the obligations
As SYSC 3.2.4 G explains, a firm cannot contract out its regulatory obligations and should take reasonable care to supervise the discharge of outsourced functions. This section provides additional guidance on managing outsourcing arrangements (and will be relevant, to some extent, to other forms of third party dependency) in relation to operational risk. Outsourcing may affect a firm's exposure to operational risk through significant changes to, and reduced control over, people,
Before entering into, or significantly changing, an outsourcing arrangement, a firm should:(1) analyse how the arrangement will fit with its organisation and reporting structure; business strategy; overall risk profile; and ability to meet its regulatory obligations;(2) consider whether the agreements establishing the arrangement will allow it to monitor and control its operational risk exposure relating to the outsourcing;(3) conduct appropriate due diligence of the service
In negotiating its contract with a service provider, a firm should have regard to:(1) reporting or notification requirements it may wish to impose on the service provider;(2) whether sufficient access will be available to its internal auditors, external auditors or actuaries (see section 341 of the Act) and to the FCA2 (see SUP 2.3.5 R (Access to premises) and SUP 2.3.7 R (Suppliers under material outsourcing arrangements);(3) information ownership rights, confidentiality
1A common
platform firm must:(1) when relying on a third party for
the performance of operational functions which are critical for the performance
of regulated activities, listed activities or ancillary
services (in this chapter "relevant services and activities")
on a continuous and satisfactory basis, ensure that it takes reasonable steps
to avoid undue additional operational risk; and7(2) not undertake the outsourcing of important operational functions
in such a way as to impair
For the
purposes of this chapter an operational function is regarded as critical or
important if a defect or failure in its performance would materially impair
the continuing compliance of a firm (other than a common platform firm)7 with the conditions and obligations of its authorisation or its other obligations under
the regulatory system, or its
financial performance, or the soundness or the continuity of its relevant
services and activities.7
If a firm (other than a common platform firm)7 outsources critical
or important operational functions or any relevant services and activities,
it remains fully responsible for discharging all of its obligations under
the regulatory system and must
comply, in particular, with the following conditions:2(1) the outsourcing must
not result in the delegation by senior personnel of
their responsibility;(2) the relationship and obligations
of the firm towards its clients under the regulatory
system
This chapter (the custody rules) applies to a firm:21(1) [deleted]22(a) [deleted]22(b) [deleted]22(1A) 2when it holds financial instruments belonging to a client in the course of its MiFID business;7(1B) 2when it is safeguarding and administering investments, in the course of business that is not MiFID business;7(1C) when it is acting as trustee or depositary of an AIF;
79(1D) when it is acting as trustee or depositary of a UK UCITS16; and97(1E) in respect of any arrangement for
The appropriate regulator does not assume that all portfolios are sensitive to downturns. The appropriate regulator also accepts that for some portfolios, particularly in unsecured lending, the impact of the material drivers on LGD may be weak. However the burden is on the firm to demonstrate that its models are appropriate for the circumstances in which they are applied.
In the appropriate regulator's view a sub-portfolio consisting of credit card or overdraft obligations will usually meet the condition in BIPRU 4.6.44 R (2)(f). In the appropriate regulator's view it is unlikely that any other type of retail exposure will do so. If a firm wishes to apply the treatment in BIPRU 4.6.44 R (1) to product types other than credit card or overdraft obligations it should first discuss this with the appropriate regulator.
A firm (other than a common platform firm)5 must arrange for orderly records to
be kept of its business and internal organisation, including all services
and transactions undertaken by it, which must be sufficient to enable the FCA57 to monitor the firm's compliance
with the requirements under the regulatory
system, and in particular to ascertain that the firm has complied with all obligations with
respect to clients.[Note:
5article 12(1)(a) of the UCITS Directive and article
(1) 5A common platform firm must arrange for records to be kept of all services, activities and transactions undertaken by it. (2) The records in (1) must be sufficient to enable the FCA to fulfil its supervisory tasks and to perform the enforcement actions under the regulatory system including MiFID, MiFIR and the Market Abuse Regulation, and in particular to ascertain that the common platform firm has complied with all obligations including those with respect to clients or potential
The5 following factors may5 be taken into account in determining whether or not refraining from action indicates behaviour5which falls under the scope of the Market Abuse Regulation,5 and are indications that it does:(1) if the person concerned has failed to discharge a legal or regulatory obligation (for example to make a particular disclosure) by refraining from acting; or(2) if the person concerned has created a reasonable expectation of him acting in a particular manner,
5In determining whether there is a pending order
5 for a client in relation to article 7(1)(d) of the Market Abuse Regulation, a factor that may be taken into account is5 if a person is approached by another in relation to a transaction, and:53(1) the transaction is not immediately executed on an arm's length basis in response to a price quoted by that person; and(2) the person concerned has taken on a legal or regulatory obligation relating to the manner or timing
(1) 2The UCITS Remuneration Code (SYSC 19E) also applies to a BIPRU firm that is a UK UCITS management company (that is, a UK UCITS management company that is a UCITS investment firm subject to BIPRU).(2) A BIPRU firm that is a UK UCITS management company will meet its obligations under SYSC 19C and SYSC 19E by complying with SYSC 19E. (3) Under (1) and (2), the FCA will not require the UK UCITS management company to demonstrate compliance with SYSC 19C.
(1) This rule applies to a firm that is unable to comply with the BIPRU Remuneration Code because of an obligation it owes to a BIPRU Remuneration Code staff member under a provision of an agreement made on or before 29 July 2010. (2) A firm must take reasonable steps to amend or terminate the provision in (1) in a way that enables it to comply with the BIPRU Remuneration Code at the earliest opportunity.(3) Until the provision in (1) ceases to prevent the firm from complying
The FCA may disapply10 the condition in BIPRU 3.4.60 R (3), if it has evidence that a well-developed and long-established residential real estate market is present in the UK10 with loss rates which are sufficiently low to justify disapplying the condition in BIPRU 3.4.60R(3)10. BIPRU 3.4.61 R implements that option. However, if the evidence changes so that these conditions are no longer satisfied, the appropriate regulator may 10revoke BIPRU 3.4.61 R.
In particular, clause 4 of the form of waiver in SUP 21 Annex 1 will not ordinarily be inserted in waivers for energy market participants that will not, at the time the waiver will take effect, clearly satisfy the conditions set out in that clause. For these purposes the FCA will take into account the relative proportions of the energy market participant's assets and revenues that are referable to the various parts of its business, as well as to any other factor that the FCA considers
(1) If a consumer notifies a firm that they wish to discharge their obligations under an MCD regulated mortgage contract prior to its expiry, the firm must provide the consumer, without delay, with the information necessary to allow them to consider that option.(2) The information under (1) must:(a) quantify the implications for the consumer of discharging their obligations prior to the expiry of the MCD regulated mortgage contract; and (b) clearly set out any assumptions that
(1) An MCD mortgage lender must give a consumer who enters into an MCD regulated mortgage contract the right to discharge fully or partially his obligations under that MCD regulated mortgage contract prior to its expiry.(2) If the consumer exercises the right in (1), the MCD mortgage lender must reduce the total cost of the credit to the consumer by an amount equal to the interest and costs for the remaining duration of the MCD regulated mortgage contract.[Note: article 25(1)
11A firm must ensure, and be able to demonstrate to the FCA, at the FCA’s request, that any relevant individuals possess the necessary knowledge and competence so as to ensure that the firm is able to meet its obligations under:(1) those rules which implement articles 24 and 25 of MiFID (including those rules which implement related provisions under the MiFID Delegated Directive); and(2) related provisions of the MiFID Org Regulation.[Note: article 25(1) of MiFID]
The effective segregation of duties is an important element in the internal controls of a firm in the prudential context. In particular, it helps to ensure that no one individual is completely free to commit a firm's assets or incur liabilities on its behalf. Segregation can also help to ensure that a firm'sgoverning body receives objective and accurate information on financial performance, the risks faced by the firm and the adequacy of its systems.
7A firm that is a principal14 of a tied agent that is an appointed representative must monitor the activities of that tied agent so as to ensure the firm complies with obligations derived from17MiFID (or equivalent obligations relating to the equivalent business of a third country investment firm) when acting through that tied agent.[Note: paragraph 3 of article 29(2)14 of MiFID]
(1) A non-UCITS retail scheme operating as a FAIF must not invest in units in schemes in COLL 5.7.7R(2)(a) to (2)(c)7 (‘second schemes’) unless the authorised fund manager has carried out appropriate due diligence on each of the second schemes and:(a) is satisfied, on reasonable grounds and after making all reasonable enquiries, that each of the second schemes complies with relevant legal and regulatory requirements;(b) has taken reasonable care to determine that:(i) the property
An authorised fund manager carrying out due diligence for the purpose of the rules in this section should make enquiries or otherwise obtain information needed to enable him properly to consider:(1) whether the experience, expertise, qualifications and professional standing of the second scheme's investment manager is adequate for the type and complexity of the second scheme;(2) the adequacy of the regulatory, legal and accounting regimes applicable to the second scheme and its
(1) CONC 7.6.12 R, CONC 7.6.13 R and CONC 7.6.14 R do not prevent a firm accepting payment (including a part payment) from a customer using a means of payment other than under a continuous payment authority. If, for example, a customer consents separately that a single payment of a specified amount may be taken on the same day or on another specified day using his or her debit card details, this is excluded from the definition of continuous payment authority.(2) CONC 7.6.14 R
(1) 2Paragraph (2) applies where a guarantor has provided a guarantee or an indemnity (or both) in respect of high-cost short-term credit. (See CONC 7.1.4R for the meanings of “guarantor” and “guarantee”.)(2) CONC 7.6.12R and CONC 7.6.13R apply to a continuous payment authority granted by the borrower and to a continuous payment authority granted by a guarantor separately. This means that the firm may make up to two requests for payment under a continuous payment authority granted
(1) The 5credit union'sgoverning body5has responsibility for ensuring that the credit union complies with the requirements of SYSC 4.1.1 R (see CREDS 2.2.1 G and CREDS 2.2.2 G). So, the governing body5 has overall responsibility for:(a) establishing objectives and formulating a business plan;(b) monitoring the financial position of the credit union;(c) determining and documenting policies and procedures;(d) directing and coordinating the work of all employees and volunteers, and
The main reasons why a credit union should maintain adequate accounting and other records are:(1) to provide the governing body5 with adequate financial and other information to enable it to conduct its business in a prudent manner on a day-to-day basis;(2) to safeguard the assets of the credit union and the interests of members and persons too young to be members; (3) to assist officers of the credit union to fulfil their regulatory and statutory duties in relation to the preparation