Outsourcing, Third-Party Risk Management & Financial Services - Avoiding Regulatory Problems

Introduction

Increasing interdependencies between the regulated and unregulated sectors and digitalisation has driven regulatory focus on operational resilience, of which outsourcing and third-party risk management are a key element.

The importance of firms effectively and efficiently managing outsourcing and third-party risk is crucial.

As the PRA’s then Deputy CEO observed in a May 2021 speech:

‘There is no bail out option if your firm is unable to function because of an operational incident. There is no operator of last resort function in Threadneedle Street.’

This webinar is suitable for legal, compliance and risk practitioners working in the UK financial services sector.

Attendees should be familiar with the key UK regulators in the financial services sector (the FCA, PRA and Bank of England) and scope of the regulatory regime.

What You Will Learn

This webinar will cover the following:

• The rationale for regulating the outsourcing and third-party arrangements of UK financial services firms
• The roles of the Bank of England, the PRA, and the FCA in the regulatory framework
• The UK regulatory framework for outsourcing and third-party risk management in the context of the regulators' focus on operational resilience. Covering:
• FCA Principles 3 and 11 and the corresponding PRA Fundamental Rules
• Summary of scope of the requirements by types of firms
• Key parts of the FCA Handbook (Senior Management Arrangements, Systems and Controls, or SYSC) and the PRA Rulebook pertaining to outsourcing and third-party arrangements
• The interaction of the UK Senior Managers and Certification Regime (SMCR) with the outsourcing and third-party risk management rules - points for senior managers.
• The regulators' approach to supervision of firms' outsourcing and third-party risk management arrangements
• Key lessons for both firms and their senior managers responsible for outsourcing and risk management which can be learned from enforcement actions, and where enforcement may focus in the future
• Points to be aware of when outsourcing and third-party arrangements cross jurisdictional borders
• Forthcoming developments in the UK regime, including:
• With regard to progression to the 2025 operational resilience implementation deadline
• New reporting requirements for outsourcing arrangements
• The Financial Services and Markets Bill
• The introduction of a designation regime for critical third-party providers

This webinar was recorded on 30th January 2023