- UK regulators (Bank of England, PRA, FCA) collaborate on proposals
- Legislative proposals target potential financial instability from relationships with critical third parties (CTPs)
- The aim is to oversee and enhance the resilience of services provided by CTPs
- Well-managed outsourcing can bring efficiencies, innovation, and operational resilience
- Risk acknowledged due to concentration of third parties serving multiple financial services clients
- Proposals recognize the need for regulatory oversight beyond the capacity of participating firms
- Oversight includes core tenets outlining the obligations of CTPs, focusing on operational risk and resilience
- CTPs provide regulators with information and assurance through annual self-assessments and scenario testing
- Proposals build on a previous discussion paper from July 2022
- Regulation targets third-party services provided by CTPs, not the CTPs themselves
- Regulators seek feedback until 15 March, and plan to publish final requirements by H2 next year
