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SYSC 15A.2 Operational resilience requirements

Important business services

SYSC 15A.2.1R

1A firm must identify its important business services.

SYSC 15A.2.2R

1A firm must keep its compliance with SYSC 15A.2.1R under review and, in particular, consider its compliance in the following circumstances:

  1. (1)

    if there is a material change to the firm’s business or the market in which it operates; and

  2. (2)

    in any event, no later than 1 year after it last carried out the relevant assessment.

SYSC 15A.2.3G

1In the course of identifying its important business services under SYSC 15A.2.1R, a firm should treat each distinct relevant service separately, and should not identify a collection of services as a single important business service.

SYSC 15A.2.4G

1The factors that a firm should consider when identifying its important business services include, but are not limited to:

  1. (1)

    the nature of the client base, including any vulnerabilities that would make the person more susceptible to harm from a disruption;

  2. (2)

    the ability of clients to obtain the service from other providers (substitutability, availability and accessibility);

  3. (3)

    the time criticality for clients receiving the service;

  4. (4)

    the number of clients to whom the service is provided;

  5. (5)

    the sensitivity of data held;

  6. (6)

    potential to inhibit the functioning of the UK financial system;

  7. (7)

    the firm’s potential to impact the soundness, stability or resilience of the UK financial system;

  8. (8)

    the possible impact on the firm’s financial position and potential to threaten the firm’s viability where this could harm the firm’s clients or pose a risk to the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets;

  9. (9)

    the potential to cause reputational damage to the firm, where this could harm the firm’s clients or pose a risk to the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets;

  10. (10)

    whether disruption to the services could amount to a breach of a legal or regulatory obligation;

  11. (11)

    the level of inherent conduct and market risk;

  12. (12)

    the potential to cause knock-on effects for other market participants, particularly those that provide financial market infrastructure or critical national infrastructure; and

  13. (13)

    the importance of that service to the UK financial system, which may include market share, client concentration and sensitive clients (for example, governments or pension funds).

Impact tolerances

SYSC 15A.2.5R

1A firm must, for each of its important business services, set an impact tolerance.

SYSC 15A.2.6R

1A firm must keep its compliance with SYSC 15A.2.5R under review and, in particular, consider its compliance in the following circumstances:

  1. (1)

    if there is a material change to the firm’s business or the market in which it operates; and

  2. (2)

    in any event, no later than 1 year after it last carried out the relevant assessment.

SYSC 15A.2.7G

1The factors that a firm should consider when setting its impact tolerance include, but are not limited to:

  1. (1)

    the nature of the client base, including any vulnerabilities that would make the person more susceptible to harm from a disruption;

  2. (2)

    the number of clients that may be adversely impacted and the nature of the impact;

  3. (3)

    the potential financial loss to clients;

  4. (4)

    the potential financial loss to the firm where this could harm the firm’s clients or pose a risk to the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets;

  5. (5)

    the potential level of reputational damage to the firm where this could harm the firm’s clients or pose a risk to the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets;

  6. (6)

    the potential impact on market or consumer confidence;

  7. (7)

    potential spread of risks to their other business services, other firms or the UK financial system;

  8. (8)

    the potential loss of functionality or access for clients;

  9. (9)

    any potential loss of confidentiality, integrity or availability of data;

  10. (10)

    the potential aggregate impact of disruptions to multiple important business services, in particular where such services rely on common operational resources as identified by the firm’s mapping exercise under SYSC 15A.4.1R.

SYSC 15A.2.8G

1When setting its impact tolerance, a firm should take account of the fluctuations in demand for its important business service at different times of the day and throughout the year in order to ensure that its impact tolerance reflects these fluctuations and is appropriate in light of the peak demand for the important business service.

SYSC 15A.2.9R

1A firm must ensure it can remain within its impact tolerance for each important business service in the event of a severe but plausible disruption to its operations.

SYSC 15A.2.10G

1While under SYSC 15A.2.9R a firm must ensure it is able to remain within its impact tolerance, it should generally not do so if this would put the firm in breach of another regulatory obligation, conflict with the proper exercise of a discretion granted to it under any rule or regulation, or result in increased risk of harm to its clients or the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets. Under certain circumstances, a firm may wish to resume a degraded service. This is usually only appropriate if having regard to the interest of the firm’s clients, the soundness, stability and resilience of the UK financial system and the orderly operation of the financial markets, the benefits of resuming a degraded service outweigh the negatives of keeping the service unavailable until the issues have been fully remediated and the service is able to be fully restored to its pre-disruption levels.

SYSC 15A.2.11G

1Under Principle 11 (Relations with regulators), the FCA expects to be notified of any failure by a firm to meet an impact tolerance.

SYSC 15A.2.12G

1When setting impact tolerances under SYSC 15A.2.5R a payment services provider should have regard to its obligations under the EBA Guidelines on ICT and security risk management.

SYSC 15A.2.13G

1Payment service providers should have regard to the impact tolerance set under SYSC 15A.2.5R when complying with the EBA Guidelines on ICT and security risk management. In particular, they should, as part of their continuity planning and testing, consider their ability to remain within their impact tolerance through a range of severe but plausible disruption scenarios.