The Financial Conduct Authority (FCA) has implemented a new oversight regime for critical third parties (CTPs) in the UK financial services sector, effective immediately as of the date of the announcement. This regime requires designated CTPs to identify and manage risks related to the critical services they provide, engage with regulators, and participate in joint testing exercises with financial firms.
The regime is established under the powers granted to the FCA, Bank of England, and Prudential Regulation Authority (PRA) to oversee these providers. The oversight aims to ensure that the services provided to UK financial firms and financial market infrastructures (FMIs) are resilient, as outlined in the regulatory framework.
The regime applies to banks, insurers, payment firms, and FMIs that rely on third-party service providers. These entities must review their operational resilience strategies and ensure compliance with the new CTP requirements, including engaging with designated CTPs and participating in information-sharing initiatives.
The FCA has not specified a deadline for compliance, but emphasizes that firms should consider how they manage dependencies on critical services as the regime is now live. The initiative aims to improve communication and transparency between CTPs and their clients, supporting better risk visibility during major incidents.
The FCA notes that while the regime cannot eliminate all disruptions, it is designed to mitigate the impact of such events on the financial system, enhancing overall operational resilience.