IIF Submits Formal Response to UK Operational Resilience Consultation

On the 15th of March, the Institute of International Finance (IIF) formally 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,’ expressing its endorsement of the UK Authorities’ proposed principles-based regulatory approach. The IIF members are of the view that this approach will adequately address potential risks to financial stability arising from disruptions or failures at critical third parties (CTPs).

Within the letter, the IIF members conveyed their support for the UK Authorities’ outcomes-focused set of requirements, highlighting their alignment with existing operational resilience requirements for financial institutions (FIs)/financial market institutions (FMIs) in the UK. The IIF posits that enhancing and supervising the operational resilience of CTPs will not only benefit the CTPs themselves, but also their customers – including FIs/FMIs – and members of society who utilize financial products and services.

While expressing overall support for the UK Authorities’ approach, the IIF also identified specific areas within the consultation that, in their estimation, require further refinement to fortify the proposals, or would benefit from greater clarity. These matters have been delineated in the letter and pertain to various themes such as international coordination, designation of CTPs, scope of the proposed operational resilience requirements, information sharing, and impacts on FIs/FMIs.

The IIF’s response validates their active engagement in the consultation process and their provision of constructive feedback to enhance the effectiveness of the proposed regulatory framework. This level of engagement underscores the IIF’s dedication to fostering stability and resilience within the global financial system.

In conclusion, the IIF’s response to the UK Operational Resilience Consultation conveys a collaborative effort to ensure that the regulatory framework effectively mitigates potential risks to the financial sector. By outlining areas for improvement, the IIF seeks to contribute to the development of a robust and comprehensive operational resilience framework that benefits all stakeholders involved.

As the consultation process persists, it is imperative for all pertinent parties to consider the feedback offered by organizations such as the IIF. By doing so, this will ultimately culminate in the establishment of a regulatory framework that safeguards the UK financial sector and reinforces resilience in the face of potential operational disruptions.