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 https://www.handbook.fca.org.uk/handbook?date=31-12-2020&timeline=True (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.

SYSC 20.1 Application and purpose

Application

SYSC 20.1.1ARRP
  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 the non-UK sub-group7, 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.

Purpose

SYSC 20.1.2GRP

This chapter amplifies Principle 2, under which a firm must conduct its business with due skill, care and diligence, and Principle 3, under which a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.

SYSC 20.1.3GRP

This chapter contains rules on reverse stress testing, which require a firm to identify and assess events and circumstances that would cause its business model to become unviable. This chapter also requires the firm's senior management or governing body to review and approve the results of the reverse stress testing exercise. This should help the firm's senior management to identify the firm's vulnerabilities and design a strategy to prevent or mitigate the risk of business failure.

SYSC 20.1.4AGRP

8The reverse stress testing requirements are an integral component of a firm's6 business planning and risk management under SYSC. For IFPRU investment firms as referred to in SYSC 20.1.1AR (1)(a)65, this chapter amplifies SYSC 7.1.1 G to SYSC 7.1.8 G on risk control.

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