Status: Please note you should read all Brexit changes to the FCA Handbook and BTS alongside the main FCA transitional directions. Where these directions apply the 'standstill', firms have the choice between complying with the pre-IP completion day rules, or the post-IP completion day rules. To see a full list of Handbook modules affected, please see Annex B to the main FCA transitional directions.

Status: This chapter was amended on 31 December 2020 as a result of Brexit. However, it is subject to the FCA Prudential Transitional Direction, which means that firms should not comply with these provisions yet. Instead, firms must follow this link and continue to comply with pre-IP completion day requirements (unless specified otherwise in the Direction). To see a full list of Handbook modules affected, please see Section B of the Annex to the Direction.

IFPRU 5.2 Advanced Measurement Approach permission

IFPRU 5.2.1 G RP

This is relevant where the AMA is applied across only part of a firm's operations and is used in conjunction with either the Basic Indicator Approach (BIA), or the Standardised Approach (TSA).

IFPRU 5.2.2 G RP

A firm may use an AMA in combination with the BIA or TSA, provided it obtains permission from the FCA. In granting such permission, the FCA is required by article 314(3) of the UK CRR1 (Combined use of different approaches) to impose the following conditions when the AMA is used in combination with BIA or TSA:

  1. (1)

    on the date of first implementation of the AMA, a 'significant' part of the institution's operational risk are captured by that approach; and

  2. (2)

    the institution to commit to apply the AMA across a 'material' part of its operations within a time schedule approved by the FCA.

IFPRU 5.2.3 G RP

For the purposes of these conditions, the FCA considers that:

  1. (1)

    a "significant" part of operational risk shall be approximately 50% (or more); and

  2. (2)

    a 'material' part of its operations shall be around 85% (or more).