Featured Product

    HMT Publishes Policy Statement on Critical Third-Party Regime

    June 10, 2022

    Her Majesty's Treasury (HMT) published a policy statement proposing the approach to mitigate risks from critical third parties, such as cloud-based service providers, to the UK finance sector. Additionally, HMT and the Japanese Financial Services Agency established a UK-Japan Financial Regulatory Forum.

    Policy statement on "Critical" Third-Party Regime

    The statement provides details on HM Treasury’s proposal for reducing the risks of systemic disruption to the financial regulators’ objectives, including financial stability and market confidence. Under this proposal, HM Treasury, in consultation with the financial regulators and other bodies, will designate certain third parties that provide services to firms as "critical." The financial regulators will then be able to make rules, gather information, and take enforcement action, in respect of certain services that critical third parties provide to firms of particular relevance to the regulators’ objectives (which the regulators refer to as "material" services). The proposed regime will allow financial regulator to directly oversee services that critical third parties provide to firms. This will enable the regulators to ensure that services critical third parties provide to firms in the finance sector are resilient, thus reducing the risk of systemic disruption. The proposed regime will provide financial regulators with powers to:

    • request information directly from critical third parties on the resilience of their material services to firms, or their compliance with applicable requirements.
    • commission an independent "skilled person" to report on certain aspects of a critical third party’s services.
    • appoint an investigator to look into potential breaches of requirements under the legislation.
    • interview a representative of a critical third party and require the production of documents.
    • enter a critical third party’s premises under warrant as part of an investigation.

    As a next step, the UK government intends to legislate the aforementioned critical third-party regime, to publish a joint discussion paper that details how these powers granted to financial regulators might be exercised, and to seek views from industry on the most effective and proportionate way to do so. The discussion paper will also explore potential specific ways for the financial regulators to coordinate the exercise of their powers with overseas financial regulators, and UK authorities and regulators from outside the financial services sector.

    UK-Japan Financial Regulatory Forum. HM Treasury, in collaboration with the Japanese Financial Services Agency, established a UK-Japan Financial Regulatory Forum, setting out provisions for the exchange of information, consultation, deference, technical mediation, and cooperation on diversity in finance, sustainable finance, and other emerging issues. The Forum will support closer cooperation on areas of mutual interest, including public-private partnerships in insurance, sustainable finance, and financial innovation. The UK and Japan also discussed their approaches for supporting international firms to access their markets, cross-border data flows, diversity in financial services, and opportunities in the insurance, asset management and fintech sectors.

     

    Related Links


    Keywords: Europe, UK, Banking, Third-Party Risk, Cloud Service Providers, Systemic Risk, Sustainable Finance, Insurance, Regtech, UK-Japan Financial Regulatory Forum, Operational Resilience, JFSA, HM Treasury

    Featured Experts
    Related Articles
    News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News
    News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News
    News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    News

    Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks

    At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.

    September 14, 2023 WebPage Regulatory News
    News

    ISSB Standards Shine Spotlight on Comparability of ESG Disclosures

    The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures

    August 22, 2023 WebPage Regulatory News
    News

    EBA Issues Several Regulatory and Reporting Updates for Banks

    The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.

    August 10, 2023 WebPage Regulatory News
    News

    BCBS Proposes to Revise Core Principles for Banking Supervision

    The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.

    August 04, 2023 WebPage Regulatory News
    News

    US Proposes Final Basel Rules, Transition Period to Start in July 2025

    The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.

    August 04, 2023 WebPage Regulatory News
    News

    FSB Report Outlines Next Steps for Climate Risk Roadmap

    The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.

    August 04, 2023 WebPage Regulatory News
    News

    EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise

    The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.

    July 31, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8931