On Friday, March 15, the Institute of International Finance (IIF) submitted a comment letter to the Bank of England, Prudential Regulation Authority and Financial Conduct Authority (the UK Authorities) in response to their Consultation Paper on ‘Operational resilience: Critical third parties to the UK financial sector’.

In the letter, IIF members express broad support for the UK Authorities’ proposed principles-based regulatory approach to manage the potential risks to financial stability that may result from disruptions or failure at critical third parties (CTPs). The UK Authorities are helpfully proposing an outcomes-focused set of requirements which align with the current UK Authorities’ operational resilience requirements for financial institutions (FIs)/financial market institutions (FMIs). Requirements to improve and oversee the operational resilience of CTPs will benefit the CTPs themselves, their customers, including FIs/FMIs, and members of broader society who use financial products and services.

While IIF members broadly support the UK Authorities’ general approach, we have identified some areas in the consultation where further refinement may strengthen the proposals, or which would benefit from greater clarity. These points are described in the letter across the following themes: international coordination, designation of CTPs, scope of the proposed operational resilience requirements, information sharing, and impacts on FIs/FMIs.