Regulators propose oversight framework for critical third parties

The BoE, PRA, and FCA set out proposed requirements for critical third parties (CTPs) in a consultation paper (CP) published on 7 December 2023. The CP follows on a discussion paper (DP3/22) published by the regulators in July 2022. The regime aims to reduce risks to the UK financial sector stability posed by CTPs.

A CTP is a third party service provider for whom failure in, or disruption to, the service they provide would risk the stability of, or confidence in, the UK financial system. HMT will be in charge of designating CTPs, based on the regulators’ recommendations.

The regulators are consulting on a broad range of requirements CTPs will need to meet to ensure the resilience of the services they provide to the financial sector. These include high level rules, detailed requirements regarding CTPs’ material services and a set of measures on information sharing, self-assessment and testing.

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