We are responsible for supervising a diverse range of firms. This includes low impact firms, international firms and groups containing ring-fenced bodies. Even within these broad categories there is substantial diversity in firm structures and sizes as well as products, which shapes the business models and risks to which these firms are exposed. We tailor our application of the supervisory assessment framework to take account of this diversity and ensure a proportionate approach.

Low impact firms

151. At an individual level, the lowest impact firms (Category 4 firms under our Potential Impact Framework) have almost no capacity to cause disruption to the UK financial system, either through the way they carry on their business or through idiosyncratic, orderly failure. However, there is a risk that problems across a whole sector or subsector could generate some disruption to the continuity of financial services, ie several firms may fail together through a common exposure, with possible wider systemic impact (as occurred in the 1990s 'small banks' crisis for example). Our proportionate and tailored approach to supervising different types of low impact firms is set out below for non- systemic UK banks and building societies, and credit unions.

Non-systemic UK banks and building societies

152. For non-systemic UK banks and building societies, our supervisory approach and level of engagement is based on the potential impact and PIF stage of the firms, overlaid with our assessment of the key risks facing each individual firm. This is shaped by the four key principles outlined in Section 2.