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Application provision

7.1 This Chapter applies to a firm that is a member of a UK-regulated EEA financial conglomerate.

[Note: Art 9(1) of the Financial Groups Directive]

7.1

01/01/2016

This Chapter applies to a firm that is a member of a UK-regulated EEA financial conglomerate.

Additional Notes


[Note: Art 9(1) of the Financial Groups Directive]

7.2

01/01/2016

A firm must comply with Group Risk Systems 2.1.

7.3

01/01/2016

For the purposes of 7.2, the risk management processes referred to in Group Risk Systems 2.1 include:

  1. (1) sound governance and management processes, which must include the approval and periodic review by the appropriate managing bodies within the financial conglomerate of the strategies and policies of the financial conglomerate in respect of all the risks assumed by the financial conglomerate, such review and approval being carried out at the level of the financial conglomerate;
  2. (2) adequate capital adequacy policies at the level of the financial conglomerate, one of the purposes of which must be to anticipate the impact of the business strategy of the financial conglomerate on its risk profile and on the capital adequacy requirements to which it and its members are subject;
  3. (3) adequate procedures for the purpose of ensuring that the risk monitoring systems of the financial conglomerate and its members are well integrated into their organisation;
  4. (4) adequate procedures for the purpose of ensuring that the systems and controls of the members of the financial conglomerate are consistent and that the risks can be measured, monitored and controlled at the level of the financial conglomerate; and
  5. (5) arrangements in place to contribute to and develop, if required, adequate recovery and resolution arrangements and plans, which a firm must update regularly.

Additional Notes


[Note: Art 9(2) of the Financial Groups Directive]

7.4

01/01/2016

For the purposes of 7.2, the internal control mechanisms referred to in Group Risk Systems 2.1 include:

  1. (1) mechanisms that are adequate to identify and measure all material risks incurred by members of the financial conglomerate and appropriately relate capital in the financial conglomerate to risks; and
  2. (2) sound reporting and accounting procedures for the purpose of identifying, measuring, monitoring and controlling intra-group transactions and risk concentrations.

Additional Notes


[Note: Art 9(3) of the Financial Groups Directive]