The Bank of England, Financial Conduct Authority and Prudential Regulation Authority have joined forces on a proposal to increase the resilience of financial services through overseeing critical third parties to UK regulated financial services firms and financial market infrastructure entities.
The joint proposal seeks to improve operation resilience and improve third-party risk management through direct regulatory oversight.
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The aim is to allow critical third parties to deliver services that contribute to greater operational resilience and innovation in a manner that focuses on benefits rather than potential risks to stability in the financial services sector.
Bank of England Financial Stability Report
The Bank of England’s latest Financial Stability Report reviewed the stability of the UK financial system and the measures that can be taken to reduce risk.
The report outlined challenging economic conditions due to geopolitical tensions, persistent inflation and uncertainties over inflation rates. These were each labelled as risks that could weaken UK economic growth.
Dr Henry Balani, Global Head of Industry & Regulatory Affairs at Encompass Corporation, said: “Collaboration between regulators, the government and industry is essential to develop and strengthen the regulatory framework and how organisations across financial services respond. So it’s encouraging to see the Bank of England, PRA and FCA working closely to increase the resilience of the sector, while recognising the importance of supporting innovation.
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By GlobalData“When it comes to risk and fighting financial crime, particularly, the latest in technology has a critical role to play, and leveraging Know Your Customer (KYC) process automation, for example, to deliver real time digital risk profiles can save institutions hours and ensure continuous compliance.
“This collaboration carries particular interest in light of the Bank of England’s Financial Stability Review. This highlighted AI, a subject much talked about. There is no denying that AI could offer exciting benefits to financial institutions. It has the potential to accelerate existing processes and augment the work of analysts, empowering them to detect financial crime risk more quickly and comprehensively.
“As the country’s key decision makers continue to assess the state of the financial services sector – with growth always top of mind – technology must be utilised to its full potential to increase resilience, effectiveness and deliver game-changing outcomes.”
