Related provisions for BIPRU 4.3.31

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DEPP 4.1.1GRP
1All statutory notice decisions under executive procedures and decisions referred to in DEPP 2.5.6A G3 will be taken either by a senior staff committee or by an individual FCA3 staff member.3
DEPP 4.1.2GRP
In the3 case of a senior staff committee,3 the decision will be taken by FCA3 staff who have not been directly involved in establishing the evidence on which the decision is based or by two or more FCA staff who include a person not directly involved in establishing that evidence,3 except in accordance with section 395(3) of the Act.33
DEPP 4.1.3GRP
The FCA's3 senior executive committee will from time to time determine that particular categories of statutory notice decision to be taken under executive procedures and decisions referred to in DEPP 2.5.6A G3 will be taken by a senior staff committee.3
DEPP 4.1.4GRP
A senior staff committee will consist of such FCA3 staff members as the FCA's3 senior executive committee may from time to time determine. The FCA's3 senior executive committee may authorise the chairman of a senior staff committee to select its other members. A senior staff committee is accountable for its decisions to the FCA's3 senior executive committee and, through it, to the FCA3 Board.33333
DEPP 4.1.5GRP
A senior staff committee may operate through standing or specific sub-committees to consider particular decisions or classes of decision, for which accountability will lie through the committee. Each meeting of a senior staff committee, or sub-committee, will include:(1) an individual with authority to act as its chairman; and(2) at least two other members.
DEPP 4.1.6GRP
A senior staff committee will operate on the basis of a recommendation from an FCA3 staff member of at least the level of associate, and with the benefit of legal advice from an FCA3 staff member of at least the level of associate.33
DEPP 4.1.7GRP
Statutory notice decisions to be taken under executive procedures and decisions referred to in DEPP 2.5.6A G,3 and not falling within the responsibility of a senior staff committee, will be taken by an individual FCA3 staff member. The decision will be:3(1) made by an executive director of the FCA3 Board or his delegate (who will be of at least the level of associate);3(2) on the recommendation of an FCA3 staff member of at least the level of associate; and3(3) with the benefit
DEPP 4.1.10GRP
If an individual responsible for a decision under executive procedures (or a more senior FCA3 staff member with responsibilities in relation to the decision concerned) considers that it warrants collective consideration, the individual may:3(1) take the decision himself, following consultation with other FCA3 staff members, as above; or3(2) refer it to a senior staff committee, which will take the decision itself.
DEPP 4.1.11GRP
(1) FCA3staff are required by their contract of employment to comply with a code of conduct which imposes strict rules to cover the handling of conflicts of interest which may arise from personal interests or associations. FCA3 staff subject to a conflict of interest must declare that interest to the person to whom they are immediately responsible for a decision.33(2) If a member of a senior staff committee has a potential conflict of interest in any matter in which he is asked
DEPP 4.1.12GRP
The secretariat to the senior staff committee will record and document all disclosures of potential conflicts of interest and the steps taken to manage them.
DEPP 4.1.13GRP
The procedure for taking decisions under executive procedures will generally be less formal and structured than that for decisions by the RDC. Broadly, however, FCA3 staff responsible for taking statutory notice decisions under executive procedures will follow a procedure similar to that described at DEPP 3.2.7 G to DEPP 3.2.27 G for the RDC except that:3(1) in a case where the decision will be taken by a senior staff committee: (a) the chairman or deputy chairman of the senior
SUP 10A.17.2GRP
If the firm or its advisers have further questions, they should contact the FCA's Contact Centre (see SUP 10A.12.6 G).
BIPRU 7.10.14GRP
A visit will usually involve the appropriate regulator wishing to meet senior management and staff from the front office, financial control, risk management, operations, systems development, information technology and internal audit areas.
BIPRU 7.10.54GRP
For example, BIPRU 7.10.53R might involve creating and documenting a prudent incremental PRR charge for the risk not captured in the VaR model and holding sufficient capital resources against this risk. In that case the firm should hold capital resources at least equal to its capital resources requirement as increased by adding this incremental charge to the model PRR. Alternatively the firm may make valuation adjustments through its profit and loss reserves to cover this material
BIPRU 7.10.60RRP
The VaR model must be fully integrated into the daily risk management process of the firm, and serve as the basis for reporting risk exposures to senior management of the firm.
BIPRU 7.10.61GRP
A firm'sVaR model output should be an integral part of the process of planning, monitoring and controlling a firm'smarket risk profile. The VaR model should be used in conjunction with internal trading and exposure limits. The links between these limits and the VaR model should be consistent over time and understood by senior management. The firm should regard risk control as an essential aspect of the business to which significant resources need to be devoted.
BIPRU 7.10.62RRP
A firm must have a risk control unit which is independent from business trading units and which reports directly to senior management. It:(1) must be responsible for designing and implementing the firm's risk management system;(2) must produce and analyse daily reports on the output of the VaR model and on the appropriate measures to be taken in terms of the trading limits; and(3) conduct the initial and on-going validation of the VaR model.
BIPRU 7.10.63RRP
A firm'sgoverning body and senior management must be actively involved in the risk control process, and the daily reports produced by the risk control unit must be reviewed by a level of management with sufficient authority to enforce both reductions of positions taken by individual traders as well as in the firm's overall risk exposure.
BIPRU 7.10.72RRP
(1) A firm must frequently conduct a rigorous programme of stress testing. The results of these tests must be reviewed by senior management and reflected in the policies and limits the firm sets.(2) The programme must particularly address:(a) concentration risk;(b) illiquidity of markets in stressed market conditions;(c) one way markets;(d) event and jump to default risks;(e) non linearity of products;(f) deep out of the money positions;(g) positions subject to the gapping of
BIPRU 7.10.89RRP
A firm must have procedures to assess and respond to the results produced from stress testing. In particular, stress testing results must be:(1) used to evaluate its capacity to absorb such losses or identify steps to be taken to reduce risk; and(2) communicated routinely to senior management and periodically to the governing body.
BIPRU 7.10.129RRP
A firm must, no later than the number of business days after the end of each quarter specified in the VaR model permission for this purpose, submit, in respect of that quarter, a report to the appropriate regulator about the operation of the VaR model, the systems and controls relating to it and any changes to the VaR model and those systems and controls. Each report must outline as a minimum the following information in respect of that quarter:(1) methodological changes and developments
IFPRU 2.3.34GRP
(1) This paragraph applies to a firm that is not a significant IFPRU firm (see IFPRU 1.2.3 R) whose activities are simple and primarily not credit-related.(2) In carrying out its ICAAP it could: (a) identify and consider that firm's largest losses over the last three to five years and whether those losses are likely to recur;(b) prepare a short list of the most significant risks to which that firm is exposed;(c) consider how that firm would act, and the amount of capital that
IFPRU 2.3.36GRP
(1) This paragraph applies to a proportional ICAAP in the case of a firm that is a significant IFPRU firm (see IFPRU 1.2.3 R) whose activities are complex.(2) A proportional approach to that firm'sICAAP should cover the matters identified in IFPRU 2.3.34 G and IFPRU 2.3.35 G, but is likely also to involve the use of models, most of which will be integrated into its day-to-day management and operation.(3) Models of the kind referred to in (2) may be linked to generate an overall
IFPRU 2.3.53GRP
If a firm's current available own funds are less than the own funds requirements indicated by the stress test, that does not necessarily mean there is a breach of IFPRU 2.3.50 R. The firm may wish to set out any countervailing effects and off-setting actions that can be demonstrated to the satisfaction of the FCA as being likely to reduce that difference. The FCA is only likely to consider a demonstration of such actions as credible if those actions are set out in a capital management
IFPRU 2.3.55GRP
A firm may decide to hold additional capital to mitigate any weaknesses in its overall control environment. These weaknesses might be indicated by the following: (1) a failure by a firm to complete an assessment of its systems and controls to establish whether they comply with SYSC; or (2) a failure by a firm'ssenior management to approve its financial results; or(3) a failure by a firm to consider an analysis of relevant internal and external information on its business and control
IFPRU 2.3.68GRP
A firm may approach its assessment of adequate capital by developing a model, including an ECM (see IFPRU 2.3.36 G), for some or all of its business risks. The assumptions required to aggregate risks modelled and the confidence levels adopted should be considered by a firm'ssenior management. A firm should also consider whether any relevant risks, including systems and control risks, are not captured by the model.
BIPRU 13.6.41RRP
(1) The firm must have a control unit that is responsible for the design and implementation of its CCR management system, including the initial and on-going validation of the model.(2) This unit must control input data integrity and produce and analyse reports on the output of the firm's risk measurement model, including an evaluation of the relationship between measures of risk exposure and credit and trading limits.(3) This unit must be:(a) independent from units responsible
BIPRU 13.6.44RRP
A firm'sgoverning body and senior management must be actively involved in the CCR control process and must regard this as an essential aspect of the business to which significant resources need to be devoted. Senior management must be aware of the limitations and assumptions of the model used and the impact these can have on the reliability of the output. Senior management must also consider the uncertainties of the market environment and operational issues and be aware of how
BIPRU 13.6.45RRP
A firm must ensure that the daily reports prepared on its exposures to CCR are reviewed by a level of management with sufficient seniority and authority to enforce both reductions of positions taken by individual credit managers or traders and reductions in the firm's overall CCRexposure.[Note: BCD Annex III Part 6 point 21]
BIPRU 13.6.46RRP
(1) A firm's CCR management system must be used in conjunction with internal credit and trading limits.(2) A firm must ensure that its credit and trading limits are related to its risk measurement model in a manner that is:(a) consistent over time; and(b) well understood by credit managers, traders and senior management.[Note: BCD Annex III Part 6 point 22]
BIPRU 13.6.48RRP
(1) A firm must have a routine and rigorous program of stress testing in place as a supplement to the CCR analysis based on the day-to-day output of the firm's risk measurement model.(2) The results of this stress testing must be reviewed periodically by senior management and must be reflected in the CCR policies and limits set by management and the governing body.(3) Where stress tests reveal particular vulnerability to a given set of circumstances, prompt steps must be taken
BIPRU 2.2.25GRP
(1) This paragraph applies to a small3firm whose activities are simple and primarily not credit-related.3(2) In carrying out its ICAAP it could:(a) identify and consider that firm's largest losses over the last 3 to 5 years and whether those losses are likely to recur;(b) prepare a short list of the most significant risks to which that firm is exposed;(c) consider how that firm would act, and the amount of capital that would be absorbed, in the event that each of the risks identified
BIPRU 2.2.26GRP
In relation to a firm whose activities are moderately complex, in carrying out its ICAAP, BIPRU 2.2.25 G (3) to (4) apply. In addition, it could:(1) having consulted the management in each major business line, prepare a comprehensive list of the major risks to which the business is exposed;(2) estimate, with the aid of historical data, where available, the range and distribution of possible losses which might arise from each of those risks and consider using shock stress tests
BIPRU 2.2.27GRP
(1) This paragraph applies to a proportional ICAAP in the case of a firm whose activities are complex.(2) A proportional approach to that firm'sICAAP should cover the matters identified in BIPRU 2.2.26 G, but is likely also to involve the use of models, most of which will be integrated into its day-to-day management and operation.(3) Models of the sort referred to in (2) may be linked so as to generate an overall estimate of the amount of capital that a firm considers appropriate
BIPRU 2.2.44GRP
If a firm's current available capital resources are less than the capital resources requirement indicated by the stress test that need not be a breach of BIPRU 2.2.41 R. The firm may wish to set out any countervailing effects and off-setting actions that can be demonstrated to the satisfaction of the appropriate regulator as being likely to reduce the difference referred to in the first sentence. The appropriate regulator is only likely to consider a demonstration of such actions
BIPRU 2.2.46GRP
A firm may decide to hold additional capital to mitigate any weaknesses in its overall control environment. These weaknesses might be indicated by the following:(1) a failure by a firm to complete an assessment of its systems and controls to establish whether they comply with SYSC; or(2) a failure by a firm's senior management to approve its financial results; or(3) a failure by a firm to consider an analysis of relevant internal and external information on its business and control
BIPRU 2.2.71GRP
A firm may approach its assessment of adequate capital by developing a model, including an ECM (see BIPRU 2.2.27 G), for some or all of its business risks. The assumptions required to aggregate risks modelled and the confidence levels adopted should be considered by a firm's senior management. A firm should also consider whether any relevant risks, including systems and control risks, are not captured by the model.
DEPP 4.2.1GRP
If FCA2 staff recommend that action be taken and they consider that the decision falls within the responsibility of a senior staff committee:2(1) in general the FCA2 staff's recommendation will go before the senior staff committee;2(2) in urgent statutory notice cases for which a senior staff committee is responsible, the decision to give the statutory notice may be taken by the chairman or, if he is unavailable, a deputy chairman of the senior staff committee, and, if it is practicable,
DEPP 4.2.2GRP
In the circumstances described in DEPP 4.2.1 G (4) the FCA2 considers that it may be necessary for an FCA2 director of division or member of a senior staff committee to take the decision to give a supervisory notice even if he has been involved in establishing the evidence on which the decision is based, as permitted by section 395(3) of the Act. Where practicable, however, FCA2 staff will seek to ensure that the FCA2 director or committee member has not been so involved.2222
SYSC 4.2.1BRRP
7For a full-scope UK AIFM, the senior personnel must, in complying with SYSC 4.2.1 R, be sufficiently experienced in relation to the investment strategies pursued by the AIFs it manages.[Note: article 8(1)(c) of AIFMD]
SYSC 4.2.2RRP
A common platform firm, a management company, a full-scope UK AIFM53 and the UK branch of a non-EEA bank1must ensure that its management is undertaken by at least two persons meeting the requirements laid down in SYSC 4.2.1 R and, for a full-scope UK AIFM, SYSC 4.2.7 R5.[Note: article 9(4) first paragraph of MiFID, article 7(1)(b) of the UCITS Directive3, article 8(1)(c) of AIFMD5and article 13(1) of CRD]66
SYSC 4.2.8GRP
Where the senior personnel of a full-scope UK AIFM will carry out a FCA8governing function and the firm has applied for the FCA's approval under section 59 of the Act, this will be considered sufficient to comply with SYSC 4.2.7 R.88
SYSC 4.3A.1RRP
1A CRR firm must ensure that the management body defines, oversees and is accountable for the implementation of governance arrangements that ensure effective and prudent management of the firm, including the segregation of duties in the organisation and the prevention of conflicts of interest. The firm must ensure that the management body:(1) has overall responsibility for the firm;(2) approves and oversees implementation of the firm's strategic objectives, risk strategy and
SYSC 4.3A.3RRP
A CRR firm must ensure that the members of the management body of the firm: (1) are of sufficiently good repute;(2) possess sufficient knowledge, skills and experience to perform their duties;(3) possess adequate collective knowledge, skills and experience to understand the firm's activities, including the main risks;(4) reflect an adequately broad range of experiences; (5) commit sufficient time to perform their functions in the firm; and(6) act with honesty, integrity and independence
SYSC 4.3A.9RRP
A CRR firm that has a nomination committee must ensure that the nomination committee:(1) engage a broad set of qualities and competences when recruiting members to the management body and for that purpose puts in place a policy promoting diversity on the management body; (2) identifies and recommends for approval, by the management body or by general meeting, candidates to fill management body vacancies, having evaluated the balance of knowledge, skills, diversity and experience
CREDS 8.3.7GRP
Where an employee performs the systems and controls function the appropriate regulator would expect the credit union to ensure that the employee had sufficient expertise and authority to perform that function effectively, for example by occupying the role of a director or senior manager.
CREDS 8.3.8GRP
4SUP 10A.94: the significant management functions: This controlled function will only apply to the credit union if the function is not being performed by a member of the committee of management and the credit union has followed the guidance in 4SUP 10A.9.4 G4.
BIPRU 4.3.9RRP
All material aspects of the rating and estimation processes must be approved by the firm'sgoverning body or a designated committee thereof and senior management. These parties must possess a general understanding of the firm'srating systems and detailed comprehension of its associated management reports.[Note: BCD Annex VII Part 4 point 124]
BIPRU 4.3.11RRP
Senior management must provide notice to the governing body or a designated committee thereof of material changes or exceptions from established policies that will materially impact the operations of the firm'srating systems.[Note:BCD Annex VII Part 4 point 125]
BIPRU 4.3.13RRP
Senior management must have a good understanding of the rating system's designs and operations. Senior management must ensure on an ongoing basis that the rating systems are operating properly. Senior management must be regularly informed by the credit risk control units about the performance of the rating process, areas needing improvement, and the status of efforts to improve previously identified deficiencies.[Note:BCD Annex VII Part 4 point 126]
BIPRU 4.3.15RRP
The credit risk control unit must be independent from the personnel and management functions responsible for originating or renewing exposures and report directly to senior management. The unit must be responsible for the design or selection, implementation, oversight and performance of the rating systems. It must regularly produce and analyse reports on the output of the rating systems.[Note:BCD Annex VII Part 4 point 128]
SYSC 19C.3.4RRP
BIPRU Remuneration Code staff comprises categories of staff including senior management, risk-takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk-takers, whose professional activities have a material impact on the firm's risk profile.
SYSC 19C.3.16RRP
A firm must ensure that the remuneration of the senior officers in risk management and compliance functions is directly overseen by the remuneration committee referred to in SYSC 19C.3.12 R, or, if such a committee has not been established, by the governing body in its supervisory function.
SYSC 19C.3.20RRP
A firm that benefits from exceptional government intervention must ensure that: (1) variable remuneration is strictly limited as a percentage of net revenues when it is inconsistent with the maintenance of a sound capital base and timely exit from government support;(2) it restructures remuneration in alignment with sound risk management and long-term growth, including when appropriate establishing limits to the remuneration of senior personnel; and(3) no variable remuneration
SYSC 19C.3.21GRP
The FCA would normally expect it to be appropriate for the ban on paying variable remuneration to senior personnel of a firm that benefits from exceptional government intervention to apply only in relation to senior personnel who were in office at the time that the intervention was required.
SYSC 7.1.6RRP
A common platform firm must, where appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of the investment services and activities undertaken in the course of that business, establish and maintain a risk management function that operates independently and carries out the following tasks:(1) implementation of the policies and procedures referred to in SYSC 7.1.2 R to SYSC 7.1.5 R; and(2) provision of reports and advice
SYSC 7.1.18RRP
(1) 13A CRR firm that is significant must establish a risk committee composed of members of the management body who do not perform any executive function in the firm. Members of the risk committee must have appropriate knowledge, skills and expertise to fully understand and monitor the risk strategy and the risk appetite of the firm.(2) The risk committee must advise the management body on the institution’s overall current and future risk appetite and assist the management body
SYSC 7.1.21RRP
(1) 13A CRR firm's risk management function (SYSC 7.1.6 R) must be independent from the operational functions and have sufficient authority, stature, resources and access to the management body.(2) The risk management function must ensure that all material risks are identified, measured and properly reported. It must be actively involved in elaborating the firm's risk strategy and in all material risk management decisions and it must be able to deliver a complete view of the whole
IFPRU 2.2.16GRP
A firm should carry out assessments of the sort described in the overall Pillar 2 rule and IFPRU 2.2.13 R at least annually, or more frequently if changes in the business, strategy, nature or scale of its activities or operational environment suggest that the current level of financial resources is no longer adequate. The appropriateness of the internal process, and the degree of involvement of senior management in the process, will be taken into account by the FCA when reviewing
IFPRU 2.2.70GRP
Where a firm is exposed to market risk, the time horizon over which stress tests and scenario analyses should be carried out will depend on, among other things, the maturity and liquidity of the positions stressed. For example, for the market risk arising from the holding of investments, this will depend upon:(1) the extent to which there is a regular, open and transparent market in those assets, which would allow fluctuations in the value of the investment to be more readily
IFPRU 2.2.73GRP
(1) In identifying an appropriate range of adverse circumstances and events in accordance with IFPRU 2.2.37 R (2):(a) a firm will need to consider the cycles it is most exposed to and whether these are general economic cycles or specific to particular markets, sectors or industries;(b) for the purposes of IFPRU 2.2.37 R (2)(a), the amplitude and duration of the relevant cycle should include a severe downturn scenario based on forward-looking hypothetical events, calibrated against
DISP 1.9.2GRP
The records of the measures taken for resolution of complaints may be used to assist with the collection of management information pursuant to DISP 1.3.3BG(1) and regular reporting to the senior personnel pursuant to DISP 1.3.3BG(6).31
DEPP 3.1.2GRP
(1) The RDC is separate from the FCA's2 executive management structure. Apart from its Chairman, none of the members of the RDC is an FCA2employee.22(2) All members of the RDC are appointed for fixed periods by the FCA2 Board. The FCA2 Board may remove a member of the RDC, but only in the event of that member's misconduct or incapacity.22
BIPRU 11.5.18RRP
3A firm must disclose the following information, including regular, at least annual, updates, regarding its remuneration policy and practices for those categories of staff whose professional activities have a material impact on its risk profile:(1) information concerning the decision-making process used for determining the remuneration policy, including if applicable, information about the composition and the mandate of a remuneration committee, the external consultant whose services
BIPRU 11.5.20RRP
(1) 3A firm that is significant in terms of its size, internal organisation and the nature, scope and the complexity of its activities must also disclose the quantitative information referred to in BIPRU 11.5.18 R at the level of senior personnel.(2) Firms must comply with the requirements set out in BIPRU 11.5.18 R in a manner that is appropriate to their size, internal organisation and the nature, scope and complexity of their activities and without prejudice to the UK or other
SYSC 3.2.6GGRP
5A firm should ensure that the systems and controls include:(1) appropriate training for its employees in relation to money laundering;(2) appropriate provision of information to its governing body and senior management, including a report at least annually by that firm'smoney laundering reporting officer (MLRO) on the operation and effectiveness of those systems and controls;(3) appropriate documentation of its risk management policies and risk profile in relation to money laundering,
SYSC 3.2.16GRP
9(1) Depending on the nature, scale and complexity of its business, it may be appropriate for a firm to delegate much of the task of monitoring the appropriateness and effectiveness of its systems and controls to an internal audit function. An internal audit function should have clear responsibilities and reporting lines to an audit committee or appropriate senior manager, be adequately resourced and staffed by competent individuals, be independent of the day-to-day activities