DP22/3: Operational resilience: critical third parties to the UK financial sector

Discussion opens
21/07/2022
21/07/2022
Deadline for comments
23/12/2022

This is a joint Discussion Paper with the Prudential Regulation Authority (PRA) and the Bank of England (Bank). In it, we share our views – and ask for yours – on potential ways to manage the systemic risks to our objectives posed by certain third parties.

Read Discussion Paper 22/3

UK financial services firms are increasingly relying on third-party services to support their operations. But while these bring multiple benefits, this increasing reliance also poses systemic risks to the supervisory authorities’ objectives, including UK financial stability, market integrity and consumer protection. No one firm can manage these potential systemic risks.

The Financial Services and Markets Bill sets out a statutory framework for overseeing the resilience of services third parties provide that many financial firms rely on. We (the supervisory authorities – the FCA, the PRA and the Bank) welcome the proposals in the Bill and are launching this discussion on potential measures for these critical third parties (CTPs).  

Who this applies to

This DP is primarily relevant to third parties (in particular those that could be designated as CTPs under any future framework), firms and financial market infrastructure firms (FMIs). However, we’d welcome feedback from all stakeholders with expertise in relevant areas to this DP including operational resilience, systemic risk, or third party risk management. 

Respond to this Discussion Paper

This DP closes on Friday 23 December 2022. We’re asking for your feedback on the topics discussed. Please send your comments or enquiries to [email protected].

Next steps

Subject to the outcome of Parliamentary debates on the Financial Services and Markets Bill, and having considered responses to this DP, we plan to consult on our proposed requirements and expectations for CTPs in 2023.