The UK FCA, PRA, and the Bank of England have jointly started a consultation into proposed requirements and expectations for the identification of critical third parties (CTPs), as part of operational resilience regulation.
The consultation, ‘CP23/30: Operational resilience: Critical third parties to the UK financial sector’, will run through to 15th March 2024.
A crucial operational risk faced by the financial sector is reliance on critical third parties (CTPs) and the UK regulators, in parallel with other regulators around the world, are seeking to manage this risk and the wider risks to the stability of, or confidence in, the financial system that could arise from a failure in, or disruption to, a CTP’s services.
The proposals in the consultation will enable CTP risks to be monitored and managed ‘in an effective but proportionate manner’.
The consultation sets out the UK regulators’ view of how CTPs will be identified and designated. It states that CTPs are expected to account for a very small number and percentage of third parties: only those that are systemically important will be designated as CTPs.