BoE, FCA and PRA have proposed measures to oversee and strengthen resilience of services that critical third parties provide to the financial sector. The discussion paper follows previous reports and consultations, and looks at how the regulators could use the new powers proposed for them in the FSM Bill, specifically;
- the framework for identifying potential CTPs, leading to recommendations to Treasury for it to make formal designations;
- minimum resilience standards to apply to services the CTPs provide to regulated firms and FMIs; and
- a framework for testing the resilience of material relevant services.
The regulators propose that these measures will complement, but absolutely not replace, existing regulatory requirements on firms and FMIs to manage their risks from contracts with these third parties.
The paper poses several questions on the risks, factors and strategies the regulators should apply.
The regulators seek comments by 23 December and, subject to progress of the Bill, would plan to consult on their proposed requirements and expectations next year.