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.
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).
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).