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SYSC 1 : Application andpurposeSection 1.2 : Purpose11.21.2.1GPurposeThe purposes of SYSC are:(1) to encourage firms' directors and senior managers to takeappropriate practical responsibility for their firms' arrangements onmatters likely to be of interest to the FCA because they impinge onthe FCA’s functions under the Act;(2) to increase certainty by amplifying Principle 3, under which a firmmust take reasonable care to organise and control its affairsresponsibly and effectively, with adequate risk management systems;(3) to encourage firms to vest responsibility for effective and responsibleorganisation in specific directors and senior managers; and(4) to create a common platform of organisational and systems andcontrols requirements for all firms.(5) [deleted]1.2.1ASYSC 1/4Gwww.handbook.fca.org.uk Release 17 Mar 2022

SYSC 1 : Application andpurposeSection 1.4 : Application of SYSC 11 to 2811.4Application of SYSC 11 to 28What?.1.4.1GThe application of each of chapters SYSC 11 to SYSC 21 is set out in thosechapters and in SYSC 1.4.1A R.1.4.1-AGThe application of each of the chapters SYSC 19F.2, SYSC 22 to SYSC 28 isset out in those chapters.1.4.1AR SYSC 12 and SYSC 21 do not apply to a firm in relation to its carrying on ofauction regulation bidding.1.4.1BGApart from SYSC 12, and SYSC 21 which are disapplied by SYSC 1.4.1A R,the other chapters of SYSC 11 to SYSC 17 do not apply in relation to afirm's carrying on of auction regulation bidding because they only apply toan insurer. SYSC 18 provides guidance on the Public Interest Disclosure Act.Other chapters of SYSC may not apply to auction regulation bidding, forexample because an exempt MiFID commodities firm will not be a MIFIDPRUinvestment firm.Actionsfor damages.1.4.2R Release 17A contravention of a rule in SYSC 11 to SYSC 21, SYSC 22.8.1R, SYSC 22.9.1R or SYSC 23 to SYSC 28 does not give rise to a right of actionby a private person under section 138D of the Act (and each of those rules isspecified under section 138D(3) of the Act as a provision giving rise to nosuch right of action). Mar 2022www.handbook.fca.org.ukSYSC 1/5

SYSC 1 : Application andpurposeSection 1.5 : Significant SYSC firm11.5Significant SYSC firmPurpose.1.5.1G(1) The purpose of SYSC 1.5 is to set out the definition of a significantSYSC firm.(2) The following governance requirements in SYSC apply by reference tothe term significant SYSC firm:(a) SYSC 4.3A.6R on the limitations in the number of directorships;(b) SYSC 4.3A.8R on the nomination committee; and(c) SYSC 7.1.18R and SYSC 7.1.18AAR on the risk committee.(3) MIFIDPRU investment firms are not subject to SYSC 4.3A.8R or SYSC 7.1.18R, and should refer instead to MIFIDPRU 7.3.(4) The definition of significant SYSC firm is also relevant in determiningwhether a firm is an enhanced scope SMCR firm for the purposes ofthe senior managers and certification regime.Definitionof a significant SYSC firm.1.5.2RA firm is a significant SYSC firm if it meets one or more of the followingconditions:(1) its total assets exceed 530 million;(2) its total liabilities exceed 380 million;(3) the annual fees and commission income it receives in relation to theregulated activities carried on by the firm exceeds 160 million in the12-month period immediately preceding the date the firm carries outthe assessment under this rule;(4) the client money that it receives or holds exceeds 425 million; and(5) the assets belonging to its clients that it holds in the course of, or inconnection with, its regulated activities exceeds 7.8 billion.1.5.3R(1) This rule defines some of the terms used in SYSC 1.5.2R.(2) “Total assets” means the firm’s total assets:(a) as set out in the most recent relevant report submitted to theFCA under SUP 16.12 (Integrated Regulatory Reporting); orSYSC 1/6www.handbook.fca.org.uk Release 17 Mar 2022

SYSC 1 : Application andpurposeSection 1.5 : Significant SYSC firm(b) (where the firm carries out the assessment under SYSC 1.5.4R atany time after the date of its most recent report in (a)) as thefirm would report to the FCA in accordance with the relevantreport, as if the reporting period for that report ended on thedate of the assessment.1(3) “Total liabilities” means the firm’s total liabilities:(a) as set out in the most recent relevant report submitted to theFCA under SUP 16.12 (Integrated Regulatory Reporting); or(b) (where the firm carries out the assessment under SYSC 1.5.4R atany time after the date of its most recent report in (a)) as thefirm would report to the FCA in accordance with the relevantreport, as if the reporting period for that report ended on thedate of the assessment.(4) “client money” means client money that a firm receives or holds inthe course of, or in connection with, all of the regulated activitiesthat it carries on:(a) as set out in the most recent client money and client asset reportsubmitted to the FCA under SUP 16.12 (Integrated RegulatoryReporting); or(b) (where the firm carries out the assessment under SYSC 1.5.4R atany time after the date of its most recent report in (a)) as thefirm would report to the FCA in accordance with the relevantreport, as if the reporting period for that report ended on thedate of the assessment.(5) “Assets belonging to its clients” means the assets to which thecustody rules apply:(a) as set out in the most recent client money and client asset reportsubmitted to the FCA under SUP 16.12 (Integrated RegulatoryReporting); or(b) (if the firm carries out the assessment under SYSC 1.5.4R at anytime after the date of its most recent report in (a)) as the firmwould report to the FCA in accordance with the relevant report,as if the reporting period for that report ends on the date theassessment is carried out.1.5.4R1.5.5RA firm must assess regularly whether it becomes a significant SYSC firm.(1) If a firm, at any time, becomes aware that it is likely to become asignificant SYSC firm, it must forthwith make arrangements toestablish and have in place sound, effective and comprehensivestrategies, processes and systems to achieve compliance with therequirements that apply to a significant SYSC firm.(2) The firm in (1) must comply with the requirements that apply to asignificant SYSC firm on the expiry of a period of 3 months from thedate it meets any one of the conditions in SYSC 1.5.2R.1.5.6R Release 17If a firm that is a significant SYSC firm ceases to meet any of the conditionsin SYSC 1.5.2R, it must continue to comply with the rules and requirements Mar 2022www.handbook.fca.org.ukSYSC 1/7

SYSC 1 : Application andpurposeSection 1.5 : Significant SYSC firmapplicable to a significant SYSC firm until the first anniversary of the date onwhich the firm ceased to be a significant SYSC firm.11.5.7G1.5.8GThe FCA may, on a case-by-case basis, require a firm which does not meetany of the conditions in SYSC 1.5.2R to comply with the rules andrequirements that apply to a significant SYSC firm if the FCA considers itappropriate to do so to meet its strategic objective or to advance one ormore of its operational objectives under the Act.(1) A firm may apply to the FCA under section 138A of the Act to waiveany one or more of the conditions in SYSC 1.5.2R if it believes thatone or more of the governance requirements in (2) that apply to asignificant SYSC firm may be disproportionate. In its application for awaiver, the FCA expects the firm to demonstrate that it should not beconsidered as significant, taking into account the size, nature, scopeand complexity of its activities, any membership of a group and theinternal organisation of that group.(2) The governance requirements referred to in (1) are:(a) SYSC 4.3A.6R on the limitations in the number of directorships;(b) SYSC 4.3A.8R on the nomination committee; or(c) SYSC 7.1.18 R on the risk committee.(3) The effect of such waiver is that the firm would not be a significantSYSC firm only for the purpose of the particular governancerequirement in (2) that the waiver is expressed to apply to. For theavoidance of doubt, such a firm would still be a significant SYSC firmfor the purpose of the other rules in the FCA Handbook that apply toa significant SYSC firm, except where expressly otherwise providedfor.SYSC 1/8www.handbook.fca.org.uk Release 17 Mar 2022

SYSC 1 : Application andpurposeAnnex 1Detailed application of SYSCPart 11Application of SYSC 2 and SYSC 3 to an insurer, a UK ISPV, a managing agent and theSocietyWho?1.1RSYSC 2 and SYSC 3 only apply to an insurer, a UK ISPV, a managing agent andthe Society except that:(1)[deleted](2)[deleted](3)[deleted](4)for a sole trader:(a)SYSC 2 applies but only if he employs any person whois required to be approved under section 59 of theAct (Approval for particular arrangements);(b)SYSC 3.2.6I R does not apply if he has no employees;and(5)[deleted](6)Except as provided for in (7), SYSC 2 and SYSC 3 do not apply to afirm in relation to benchmark activities.(7)SYSC 2 and SYSC 3 continue to apply to a person with permissionto carry on the regulated activity of administering a specifiedbenchmark acting as such.1.1A1.2G(1)As a consequence of the benchmarks regulation, the regulatedactivity referred to in SYSC 1 Annex 1 1.1R(7) will cease to apply incertain circumstances (see SUP TP 10 for an explanation of thosecircumstances).(2)The effect of SYSC 1 Annex 1 1.1R(7) is that SYSC 2 and SYSC 3 continue to apply to firms which still have permission to carry on theregulated activity in SYSC 1 Annex 1 1.1R(7) when carrying on thatactivity.G[deleted]What?1.3RSYSC 2 and SYSC 3 apply with respect to the carrying on of:(1)regulated activities;(2)activities that constitute dealing in investments as principal, disregarding the exclusion in article 15 of the Regulated ActivitiesOrder (Absence of holding out etc);(3)ancillary activities in relation to designated investment business,home finance activity and insurance distribution activity; and(4)activities directly arising from insurance risk transformation;except that SYSC 3.3 applies as described in SYSC 1 Annex 1 1.3AR and SYSC3.2.6A R to SYSC 3.2.6J G do not apply as described in SYSC 1 Annex 1.1.4R. Release 17 Mar 2022www.handbook.fca.org.ukSYSC 1 Annex 1/1

SYSC 1 : Application andpurpose1Annex 1Part 1Application of SYSC 2 and SYSC 3 to an insurer, a UK ISPV, a managing agent and theSociety1.3ARSYSC 3.3 only applies in relation to the carrying on of insurance distribution ac-tivities.1.4RSYSC 1 Annex 1/2SYSC 3.2.6A R to SYSC 3.2.6J G do not apply:(1)with respect to the activities described in SYSC 1 Annex 1.1.3R(2)and SYSC 1 Annex 1.1.3R(3); or(2)in relation to the following regulated activities:(a)general insurance business;(aa)insurance risk transformation;(b)insurance distribution activity in relation to a general insurance contract or pure protection contract;(c)long-term insurance business which is outside thescope of the Solvency II Directive (unless it is otherwise one of the regulated activities specified in thisrule);(d)business relating to contracts which are within theRegulated Activities Order only because they fallwithin paragraph (e) of the definition of "contractof insurance" in article 3 of that Order;(e)(i)arranging, by the Society, of deals in general insurance contracts written atLloyd's; and(ii)managing the underwriting capacity ofa Lloyd's syndicate as a managing agentat Lloyd's;(f)home finance mediation activity and administering ahome finance transaction; and(g)reversion activity; or(3)to a pure reinsurer; or(4)in relation to activities directly arising from insurance risk transformation.www.handbook.fca.org.uk Release 17 Mar 2022

SYSC 1 : Application andpurposeAnnex 1Part 1Application of SYSC 2 and SYSC 3 to an insurer, a UK ISPV, a managing agent and theSociety1.5RSYSC 2 and SYSC 3, except SYSC 3.2.6A R to SYSC 3.2.6J G, also apply with respectto the communication and approval of financial promotions which:1.61.7RG(1)if communicated by an unauthorised person without approvalwould contravene section 21(1) of the Act (Restrictions on financial promotion); and(2)may be communicated by a firm without contravening section238(1) of the Act (Restrictions on promotion of collective investment schemes).SYSC 2 and SYSC 3, except SYSC 3.2.6A R to SYSC 3.2.6J G, also:(1)apply with respect to the carrying on of unregulated activities ina prudential context; and(2)take into account any activity of other members of a group ofwhich the firm is a member.SYSC 1 Annex 1.1.6R(2) does not mean that inadequacy of a group member'ssystems and controls will automatically lead to a firm contravening, for example, SYSC 3.1.1 R. Rather, the potential impact of a group member's activities, including its systems and controls, and any systems and controls that operate on a group basis, will be relevant in determining the appropriatenessof the firm's own systems and controls.Where?1.8RSYSC 2 and SYSC 3 apply with respect to activities carried on from an establish-ment maintained by the firm (or its appointed representative or, where applicable, its tied agent) in the United Kingdom unless another applicablerule which is relevant to the activity has a wider territorial scope, in whichcase SYSC 2 and SYSC 3 apply with that wider scope in relation to the activitydescribed in that rule.1.8AR(1) SYSC 3, except SYSC 3.2.6AR to SYSC 3.2.6JG, and(2) for a UK domestic firm, SYSC 2;also apply in a prudential context with respect to activities wherever theyare carried on.1.9RSYSC 2 and SYSC 3, except SYSC 3.2.6A R to SYSC 3.2.6J G, also apply in a pruden-tial context to a UK domestic firm with respect to activities wherever theyare carried on.1.10RSYSC 3, except SYSC 3.2.6A R to SYSC 3.2.6J G, also applies in a prudential con-text to an overseas firm with respect to activities wherever they are carriedon.1.11G(1)In considering whether to take regulatory action under SYSC 2 orSYSC 3 in relation to activities carried on outside the United Kingdom, the appropriate regulator will take into account the standards expected in the market in which the firm is operating.(2)Most of the rules in SYSC 3 are linked to other requirements andstandards under the regulatory system which have their own territorial limitations so that those SYSC rules are similarly limitedin scope.Actions for damages1.12RA contravention of the rules in SYSC 2 and SYSC 3 does not give rise to a rightof action by a private person under section 138D of the Act (and each ofthose rules is specified under section 138D(3) of the Act as a provision givingrise to no such right of action).Part 2Application of the common platform requirementsWho? Release 17 Mar 2022www.handbook.fca.org.ukSYSC 1 Annex 1/31

SYSC 1 : Application andpurpose1Annex 1Part 2Application of the common platform requirements2.1RThe common platform requirements apply to every firm apart from an insurer, a UK ISPV, a managing agent and the Society unless provided otherwise in a specific rule.2.2R[deleted]2.3RFor a sole trader:(1)SYSC 4.3 does not apply as long as they do not employ any per-son who is required to be approved under section 59 of the Act(Approval for particular arrangements);(2)2.4RSYSC 4.1.4 R and SYSC 6.3.9 R do not apply if he has no employees.For a UCITS qualifier:(1)the rule on responsibility of senior personnel (SYSC 4.3) does notapply; and(2)the common platform requirements apply in relation to the communication and approval of financial promotions only as set outin SYSC 1 Annex 1.2.12R.[Note: section 266 of the Act.]2.4ARFor an AIFM qualifier:(1)the rule on responsibility of senior personnel (SYSC 4.3) does notapply; and(2)the common platform requirements apply in relation to the communication and approval of financial promotions only as set outin SYSC 1 Annex 1, 2.12R.2.5RFor an authorised professional firm when carrying on non-mainstream regulated activities, the common platform requirements on financial crime, conflicts of interest and Chinese walls do not apply.2.5ARThe common platform requirements on financial crime do not apply to a firmfor which a professional body listed in Schedule 1 to the Money LaunderingRegulations, and not the FCA, acts as the supervisory authority for the purposes of those regulations.2.6R[deleted]2.6AR[deleted]SYSC 1 Annex 1/4www.handbook.fca.org.uk Release 17 Mar 2022

SYSC 1 : Application andpurposeAnnex 1Part 2Application of the common platform requirements2.6BRSubject to SYSC 1 Annex 1 2.6CR, the common platform requirements do notapply to a full-scope UK AIFM of an unauthorised AIF except for:(1)SYSC 4.1.1 R to SYSC 4.1.2 R and SYSC 4.1.2B R to SYSC 4.1.2D R;(2)SYSC 4.2.1 R, SYSC 4.2.1B R, SYSC 4.2.2 R to SYSC 4.2.5 G, SYSC 4.2.7 Rand SYSC 4.2.8 G;(3)SYSC 6.1.1 R, which only applies to the extent that it relates to theobligation to establish, implement and maintain adequate policies and procedures for countering the risk that the firm (including its managers and employees) might be used to further financial crime;(4)SYSC 6.1.4B G(5)SYSC 6.3;(6)SYSC 7.1.7BA G(7)SYSC 10.1.1 R and SYSC 10.1.22 R to SYSC 10.1.26 R; and(8)SYSC 10.2.2.6CRThe common platform requirements apply to an AIFM investment firm whichis a full-scope UK AIFM in respect of its MiFID business in line with Column Ain Table A of Part 3.2.6DRThe common platform requirements apply to a full-scope UK AIFM of an authorised AIF in line with Column A in Table A of Part 3.2.6EGThe common platform requirements apply to a small authorised UK AIFM inline with Column B in Table A of Part 3 (unless such a firm is also a commonplatform firm, in which case they must comply with Column A).2.6FR[deleted]2.6GR(1)Except as provided for in (2), the common platform requirementsdo not apply to a firm in relation to benchmark activities.(2)The common platform requirements continue to apply to a person with permission to carry on the regulated activity of administering a specified benchmark acting as such.(1)As a consequence of the benchmarks regulation, the regulatedactivity referred to in SYSC 1 Annex 1 2.6GR(2) will cease to applyin certain circumstances (see SUP TP 10 for an explanation ofthose circumstances).(2)The effect of SYSC 1 Annex 1 2.6GR(2) is that the common platform requirements continue to apply to firm

SYSC 11 Liquidity risk systems and controls 11.1 Application SYSC 12 Group risk systems and controls requirements 12.1 Application SYSC 13 Operational risk: systems and controls for insurers 13.1 Application 13.2 Purpose Release 15