Operational Resilience - third party service provision and outsourcing - the new normal
In December 2019, the Bank of England, Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) published consultation papers to implement a stronger regulatory framework to promote greater operational resilience of regulated firms and financial market infrastructures (FMIs).
The papers build on the joint discussion paper 18/04 published in July 2018 “Building the UK financial sector’s operational resilience” and also recent initiatives by other regulators, including final guidance by the European Banking Authority (EBA) on outsourcing (February 2019) and ICT and security risk management (November 2019).
The papers will be carefully scrutinised by regulated firms, but also have important consequences for vendors who will provide services to regulated firms (directly or indirectly) with regard to important services, and also potentially extend the reach of regulation on outsourcing into the PRA regulated sector in a manner consistent with recent changes to the banking and payments sectors.
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