In December 2019, the regulators issued a number of consultation papers on Operational Resilience.
FCA CP 19/32 looked at impact tolerances for important business services. The papers follow many of the key principles outlined by the regulators in DP 1/18, “Building the UK financial sector’s operational resilience”. The paper only applies to banks, building societies, PRA designated investment funds, solvency II firms, RIEs, enhanced SM&CR firms and those registered under payment service or electronic money regulations. It is still worth all Credit Unions reading the paper though as it explains some of the key concepts in DP 1/18.
The PRA also issued CP30/19 which looked at outsourcing and third party risk. Some of the sections of this consultation paper are relevant to Credit Unions. Sections 2.3, 5.11, 5.12 and tables 2, 5 and 6 in particular. In these sections they set out the expectation that Credit Unions manage their outsourcing and third party risks prudently. In addition, under the proposals Credit Unions must inform the regulator before entering or significantly changing a material to outsourcing arrangement. The PRA defines material outsourcing as “outsourcing of services of such importance that weakness or failure of the service would cast serious doubt upon the firm’s continuing satisfaction of the threshold conditions or compliance with the fundamental rules” (see section 2 for more details).
For assistance with adopting the new approach to operational resilience please contact us at creditunion@alexandersloan.co.
For assistance with adopting the new approach to operational resilience please contact us at creditunion@alexandersloan.co.